The 7 Hottest Augmented Reality Stocks to Own for 2023 and Beyond | InvestorPlace
As technological innovation continues to integrate into everyday functionalities, investors ought to consider the hottest augmented reality stocks to own for 2023 and beyond. To get everyone on the same page, AR refers to platforms that overlay “visual, auditory, or other sensory information onto the real world to enhance one’s experience,” per Investopedia.
It’s another dimension of tech integration that will continue to expand in the years ahead. According to Grand View Research, the global AR market reached a valuation of $25.33 billion in 2021. However, experts project that the sector will expand at a compound annual growth rate (CAGR) of 40.9% between 2022 and 2030. By the end of the forecasted period, the global AR industry may enjoy total revenue of $597.54 billion. That’s simply too high a figure for any tech enterprise to ignore. Therefore, these are the hottest augmented reality stocks to own to advantage of this trend.
Alphabet (GOOG, GOOGL)
As anyone remotely familiar with the platforms of modernity can attest, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) needs no introduction. Indeed, the theoretical implosion of Alphabet might spark worldwide pandemonium, so integrated has the company become in everyday life. Practically speaking, Alphabet’s Google owns the internet. If you want to get anything done, Alphabet represents the gatekeeper.
Of course, this discussion centers on the hottest augmented reality stocks to own. Nevertheless, just in case this thesis doesn’t pan out, investors should realize that it’s more than just a single enterprise.
Regarding AR specifically, Google brings several innovations to the table. In particular, its platform’s ability to scan physical business locations and instantly pull up reviews – on Google of course! – presents incredible practicalities.
On a financial note, I appreciate Alphabet’s strong profit margins, which then lead to an excellent return on equity of 26.6%. This stat reflects the superior ability to convert equity financing into profits. Thus, GOOG makes sense as one of the hottest augmented reality stocks to pick up on discounts.
Himax Technologies (HIMX)
Based in Taiwan, Himax Technologies (NASDAQ:HIMX) represents a leading supplier and fabless semiconductor manufacturer. Currently, Himax commands a market capitalization of $1.22 billion. On a year-to-date basis, HIMX gave up more than 46% of equity value, making it one of the riskier names among the hottest augmented reality stocks to own. That said, HIMX did gain 44% since the end of September.
Regarding AR applications, Himax specializes in technologies involving continuous movable lenses and lens arrays. To make a long story short, Himax seeks to imbue overlayed images with accurate fidelity. This way, the end user enjoys an accurate-to-scale representation rather than an overlayed image for its own sake. As the sector continues to expand, Himax’s relevance will likely rise as the need for accurate immersion also lifts.
For contrarians, HIMX offers another gift. Currently, the market prices shares at only 9.7 times forward earnings. This stat ranks nearly 83% below the competition, making it an attractive undervalued play.
Unity Software (U)
Headquartered in San Francisco, California, Unity Software (NYSE:U) represents a video game software development company. Per its public profile, the enterprise is best known for the development of Unity, a licensed game engine used to create video games and other applications. At the moment, the software specialist carries a market cap of just under $12 billion.
Now, a significant challenge associated with even the hottest augmented reality stocks to own centers on volatility. Unity is no exception. Since the start of the year, U stock gave up nearly 79% of its equity value. However, it’s noteworthy that since the close of the Nov. 9 session, U gained over 37%.
Regarding the AR landscape, Unity offers an end-to-end creation platform, allowing developers to push the integration envelope. It features significant applications, including architecture, automotive design, and multimedia.
Still, before you dive into U stock, you should note that its financials are not the greatest. Therefore, consider it a high-risk, high-reward venture.
A popular social media network and camera developer, Snap (NYSE:SNAP) saw a valuation bump during much of the new normal. Looking back, the extreme burst of bullish sentiment made sense. With households sheltering in place and isolated from their favorite people and activities, Snap’s Snapchat app represented one of the few meaningful alternatives to socialization. However, the gradual return to normalization popped the bubble.
As with Unity above, investors need to be careful with SNAP and understand the speculative nature of the trading proposition. Since the start of the year, shares hemorrhaged a very worrying 81% of equity value. Since around the end of July, however, SNAP somewhat stabilized though it’s still volatile compared to “normal” securities. Nevertheless, the underlying company could make a case for the hottest augmented reality stocks to own, especially among gamblers. With Snap offering myriad image overlay applications, as the broader segment grows, it could ride coattails.
Headquartered in San Jose, California, Lumentum (NASDAQ:LITE) specializes in delivering innovative photonics to accelerate the speed and scale of the cloud, networking, advanced manufacturing, and 3D sensing applications. On paper, it appears to command myriad relevancies that would easily make LITE one of the hottest augmented reality stocks to own. Unfortunately, it’s going through a rough patch.
Last month, Lumentum fell badly after the optoelectronics delivered a downbeat forecast. Essentially, global supply chain woes continue to hinder the broader tech industry. Since the beginning of the year, LITE dropped nearly 51% in equity value. Nearer-term momentum also rates weakly, with shares down almost 6% in the trailing month.
However, it’s also important to note that Lumentum represents a supplier to consumer tech giant Apple (NASDAQ:AAPL). And while broader macroeconomic headwinds also present concerns for Lumentum, at some point, the supply chain woes should ease. Therefore, if you can handle the volatility, LITE could be interesting as long-term speculation.
NexTech AR Solutions (NEXCF)
Based In Toronto, Canada, NexTech AR Solutions (OTCMKTS:NEXCF) is one of the micro-cap plays among the hottest augmented reality stocks to own. Coming in at just under 91 million CAD (roughly $66.5 million), prospective buyers must be prepared for extreme volatility. Adding to this warning, NEXCF represents a penny stock in the over-the-counter market.
Still, what I appreciate about NexTech is that it represents a pure-play AR competitor. While a diversified enterprise features its own positive attributes, NEXCF brings more to the table for the true AR believer. Primarily, NexTech specializes in delivering end-to-end AR solutions for its enterprise-level clients.
As well, the company boasts performance stats for those companies that integrate AR technologies. For instance, enterprises enjoy 250% higher conversion rates for AR-enabled products and 94% higher click-through rates.
To be fair, NEXCF rates as a speculative investment, shedding about 40% YTD. Still, in the trailing six-month period, shares more than doubled their value. If you’re a gambler, you may want to roll the dice.
Founded in 2022, ARway (OTCMKTS:ARWYF) represents a fresh-off-the-boat enterprise. Indeed, the company just spun off from the aforementioned NexTech AR Solutions. Since the first public close, Google Finance data reports that ARWYF gained 14.5% of equity value. Just that fact alone makes it intriguing from the perspective of the hottest augmented reality stocks to own.
Underneath the hood, ARway seeks to build new pathways to the metaverse. To get there, the company developed a no-code, no-beacon spatial computing platform. Per its website, this technology links the real and the virtual into a single seamless experience through augmented reality. While this innovation can forward myriad applications, it’s perhaps best to use it as a guided tour mechanism. From there, the platform can facilitate advanced navigation solutions.
While the fundamental narrative intrigues, ARWYF essentially still represents an early bird venture. Therefore, only battle-hardened risk-takers should apply here.
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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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