While the idea of digital immersion might seem suited exclusively for video games, that’s not necessarily the case, boding well for virtual reality stocks. And even the innovation centered only on entertainment, that’s not a bad place to be.
According to Grand View Research, the video game market reached a valuation of $217.06 billion in 2022. By 2030, the sector could print revenue of $583.69 billion, representing a compound annual growth rate (CAGR) of 13.4%. For VR, the sector could be worth $435.36 billion, representing a CAGR of 27.5% from 2023.
Stated differently, you ignore this space at the risk of incurring an opportunity cost. With that, below are three virtual reality stocks to consider.
Meta Platforms (META)
Formerly known as Facebook, Meta Platforms (NASDAQ:META) apparently got tired owning the world’s largest online social network. As a result, the company has shifted its focus aggressively on the metaverse. A lot of folks make this concept more difficult than it needs to be. It’s really a virtualization medium that allows users to interact with others in a computer-generated environment.
Now, I’ll freely admit that some of Meta’s metaverse proposals are a bit out there. Case in point is the office virtualization thingy, which in my opinion is dystopian: just go to the darn office already! However, if I remove my bias, I can acknowledge that there’s plenty of potential in terms of utilitarian connectivity protocols.
What matters most regarding virtual reality stocks, though, is performance. Last fiscal year, the company beat all its quarterly bottom-line targets. Its best print came during the third quarter, when earnings per share of $4 beat the target of $3.31.
For the current fiscal year, analysts are looking for EPS of $20 on revenue of $158.25 billion. That’s a massive improvement over last year’s results of $14.87 EPS on sales of $134.9 billion.
Microsoft (MSFT)
A gargantuan player in the software department, Microsoft (NASDAQ:MSFT) shows no sign of curbing its ambitions. It’s really a leader across multiple innovation categories, including artificial intelligence. As a result, it’s not surprising that it ranks among the top virtual reality stocks. In particular, I see huge potential for its mixed reality headset called HoloLens.
To be fair, it’s not a pure-play VR solution. However, Microsoft is pushing the boundaries of what is possible, integrating the best virtualization technologies and juxtaposing them with real-life protocols. With HoloLens, workers in technical and critical fields – let’s say heavy machinery and medical care – can receive invaluable training. And they can also receive guidance in an environment where mistakes won’t have deadly consequences.
Financially, Microsoft is a handy lead-off batter. It doesn’t really hit home runs but it gets on base. That’s important for winning games over a long season. For fiscal 2024, analysts project EPS of $11.65 on revenue of $244.22 billion. That’s a big improvement over last year’s result of $9.81 on sales of $211.91 billion.
Taiwan Semiconductor (TSM)
As a multinational semiconductor contract manufacturing and design company, Taiwan Semiconductor (NYSE:TSM) is not a pure-play candidate for virtual reality stocks. However, VR applications and hardware won’t get very far with advanced computer chips. Indeed, as The Wall Street Journal argued, a case can be made that TSMC is the world’s most important company.
Ultimately, any high-powered application or protocol – whether it be generative AI or VR – requires incredible processing capacity. TSMC provides the computing power necessary to move the world’s latest and greatest tech advancements. Should VR expand in scope and scale (which is what’s happening), TSM stock should continue charging higher. Notably, it’s up over 38% this year.
For fiscal 2024, analysts believe EPS will land at $5.76. That’s up noticeably from last year’s print of $5.19. On the top line, they’re calling for revenue to reach $84.34 billion, up 21.5% from last year’s result of $69.4 billion.
Given how important TSMC is to not only VR but other innovations, it’s easily a name to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
