Augmented reality stocks represent companies that superimpose computer-generated images onto the user’s view of the real world. It includes more than just images with other sensory elements such as sound.
The application of augmented reality (AR) is wide-ranging. But whatever the application, investors should note that one of the overarching goals of augmented reality is to increase overall data collection.
In my opinion, that’s one of the best reasons to believe that augmented reality stocks have the potential to create wealth for your kids’ kids. All of the data collected through AR devices will be used by companies to improve their products. They will have a first-person perspective of the real-world use of their products as a result of AR.
Privacy concerns aside, AR has the potential to substantially boost companies’ ability to best tailor products and services to consumers. What follows is a discussion of two stocks directly making AR hardware and one that is a supplier. All three have the potential to reward future generations.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is an obvious choice among augmented reality stocks for your kids’ kids.
Formerly known as Facebook, Meta Platforms undertook a drastic rebrand in late October of 2021. The company was clear it meant to capitalize on the metaverse hype that prevailed at the time.
The rebrand was a disaster. Inflation was hot and rate hikes would soon end the party around all things growth-related. That would sink the economy and hurt Meta Platforms’ family of apps reporting division which relies heavily on Facebook ad revenues.
Those revenues have rebounded strongly of late but Meta’s Reality Labs division continues to bleed money. Reality Labs is where the company continues to develop AR headsets and other products and services for the futuristic sector. META stock is strong and has performed very well in 2024, increasing by 45%. That’s the point about investing in Meta Platforms for AR: although Reality Labs arguably has yet to find its footing, META is incredibly strong nonetheless.
That said, there are some real bright spots at Reality Labs. Revenues from the reporting segment increased by nearly 30% in Q1 reaching $440 million. The growth is there. The opportunity exists, it’s just not yet profitable.
So, I’d argue investors should choose Meta Platforms for its ability to capture strong economic performance and secondarily for the exposure to what could be a future cash cow in AR.
Apple (AAPL)
Apple (NASDAQ:AAPL) is another dominant tech stock with deep AR aspirations and current developments. Investors who believe AR will change the future and create wealth in the process should certainly consider investing in Apple.
That isn’t to say that Apple is currently making huge waves in the world of augmented reality. It’s quite the opposite. The Vision Pro has not met initial sales expectations in 2024. It was a highly touted product release in 2023 but garners almost no attention in summer 2024.
Apple’s AI ambitions are the talk of the town at the moment. My expectation is that Apple will work AI into AR headsets moving forward. The company will certainly continue to work to figure out the product because the opportunity to gather more data is simply too great.
Apple’s iPhone sales are expected to rebound as its newly released AI is implemented in its phones. That’s why investors should consider purchasing the once-again hot company. Its AR prowess remains to be determined but the opportunity is massive and clear.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) is another great stock for the long term. It’s a company and equity that promises to reward investors for a long time.
At the moment, TSM is soaring on the back of the artificial intelligence boom. It provides the manufacturing for the world’s best semiconductor firms including Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and most of the world’s chip firms.
However, TSM is a contract manufacturer for many industries, not only those for application to AI. AR hardware requires advanced chipsets in order to handle the computing demands that underpin the technology. That strongly suggests that Taiwan Semiconductor Manufacturing will benefit from the emergence of the AR opportunity as well.
For now, invest in TSM because it is the foundry to the world. It supplies chips that are increasingly in demand as everything further digitizes. Whether it’s AI or AR, TSM is a great choice.
On the date of publication, Alex Sirois 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
