Despite widespread economic concerns, Americans are actively engaging in holiday spending. While broader economic worries persist, individuals are significantly increasing expenditures on seasonal gifts. Black Friday already shattered last year’s record, as online spending alone reached $9.8 billion, surpassing the figures from last year, according to Adobe Analytics. As consumers seek innovative and immersive experiences, the demand for VR technology is expected to rise, leading to growth in these three VR stocks. This positive consumer sentiment and increased spending bodes well for virtual reality (VR) stocks.
Unity Software (U)
Unity Software (NYSE:U) is a video game software development company as well as the world’s leading platform for creating and running interactive real-time 3-D content. U is up 9% year-to-date (YTD), at $29.37 per share. WSJ analysts gave Unity stock 11 Buy ratings and forecast a median 12-month price target of $29, ranging from a high of $46.00 to a low of $16.00.
Unity Software reported solid Q3 financials, with a 69% year-over-year (YoY) increase in revenue to $544 million and a free cash flow of $104 million. The company’s Create Solutions revenue was $189 million in the third quarter, with subscriptions increasing by 19%. U’s Grow Solutions was up 166% YoY, recording a revenue of $355 million.
Unity’s VR software allows developers to create engaging games and interactive stories and transport people to new worlds by creating their own VR models. Unity’s VR platform has an edge over its competitors due to its span of platform support. Creators can build VR models compatible with multiple game platforms like SteamVR, Meta Quest, Playstation VR and many more. That appeals to many developers because it simplifies development and reduces the need for cross-platform coding.
Unity Software is well-positioned to capitalize on the growing market for virtual reality technology. Its solid financials, versatile VR platform and global reach make it a sound investment with plenty of room for growth in the future.
Snowflake (SNOW)
Snowflake (NYSE:SNOW) is a cloud-based data warehouse integral to the future of machine learning and AI, with notable partnerships with companies such as Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).
Currently, SNOW stock sits at a price of $171, up 27% YTD. The stock is projected to grow even more based on 19 Wall Street analysts offering 12-month price targets for Snowflake. The projected price aims to be $196, with a high forecast of $215 and a low forecast of $180.
On November 29th Snowflake will announce its Q3 earnings. That announcement will likely indicate the growth of the company, with projections estimating a YOY growth of 27.56% in earnings. Thus, a short-term investment now would likely be successful.
The second and more relevant reason stems from AI’s market potential and growth expectations. By 2025, the AI market globally will reach a whopping $190.61 billion, compounding at an annual growth rate of 36.62%. As a result, SNOW will benefit from this surge in technologies. At the end of Q2 2023, more than 30% of companies in the Global 2000 used SNOW as part of their business. Snowflake added more than 1,800 new customers YOY and revenue grew 83%.
Snowflake will be a pivotal player in cloud-based data warehousing for AI, boasting notable partnerships and a lofty projected stock rise. Anticipated Q3 earnings growth and the booming AI market fortify its promising trajectory at technology’s forefront.
NetEase (NTES)
NetEase (NASDAQ:NTES) is a communication services company dominating the Chinese gaming market, with an expansion to VR games. Yahoo! Finance has 28 analysts predicting a 1-year price range on NTES to be between $114.21 and $168.31, with a mean of $135.95.
NTES boasts healthy financials. The company reported $3.77 billion in revenue for Q4 2023 with strong profitability through a 58.5% gross profit margin. NTES demonstrates signs of being undervalued with $1.67 EPS, beating estimates by $.30. Management has improved return on capital expenditures over the past year, with an 11.5% ROTC and a 15.6% ROTA, both well above sector medians.
NetEase showcases its growth opportunities to investors through strategic partnerships. The company partnered with Checkout.com, a payment solution provider. NetEase plans to leverage the company’s experience in cross-border payments, expanding its customer base to Europe, the Americas, South Korea and Southeast Asia.
NTES is a Buy stock for investors because of the company’s strong financials, a strategic partnership that allows for global customer base expansion and other reasons mentioned above.
On the date of publication, Michael Que did not hold (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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
