What Is Augmented Reality?
In the tech world, the best stocks usually are not the ones providing the technology of today, but the ones developing the technology of tomorrow. Look no further than Apple Inc.‘s (NASDAQ:AAPL) resurgence of the 2000s with innovative products like the “iPod” and “iPhone,” or how Facebook Inc (NASDAQ:FB) took a social media platform and, in little over a decade, turned it into a multi-billion dollar empire. Which brings us to the top 4 stocks to watch in augmented reality.
Augmented reality may just be the next revolutionary tech that consumers across the globe will be enjoying within the next few years. Don’t trust me? How about Apple CEO Tim Cook?
“I regard it as a big idea like the smartphone,” Cook said to The Independent in an interview. “The smartphone is for everyone, we don’t have to think the iPhone is about a certain demographic, or country or vertical market: it’s for everyone. I think AR is that big, it’s huge.” (Source: “Apple CEO Tim Cook: As Brexit hangs over UK, ‘times are not really awful, there’s some great things happening’,” The Independent, February 10, 2017.)
AR and virtual reality could be some of the biggest tech to hit store shelves in years.
What is augmented reality? As the name implies, AR is essentially when one of your devices is able to add a virtual layer to the real world. For instance, the popular game “Pokémon Go” was an AR experience, where players would view the world through their phones and see the monsters roaming about as if they existed in your neighborhood or school or street. It led to some awkward situations when cartoon critters started appearing in sombre places like war memorials and funeral homes, but I digress.
Pokémon Go is a fitting example of just how ready the public is for this kind of tech to make a breakthrough to the mainstream. The game dominated headlines for weeks and made roughly $600.0 million dollars in the three months following its release. (Source: “We finally know how much Nintendo made from Pokémon Go,” Quartz, October 26, 2016.)
Download numbers are in the hundreds of millions as well, making it one of the most popular games of all time.
And that’s just one application of AR. As more companies invest in augmented reality, expect to see a number of new functions with everything from real-time heads-up displays to simulations. Which means there could be big money in the near future within the best augmented reality stocks.
Augmented Reality vs Virtual Reality
Before you start investing in augmented reality, it’s important to note that there is a difference between AR and virtual reality, or VR.
The main point of departure between AR and VR is that AR merely adds virtual elements to the real world while VR creates an entirely simulated environment that you interact with.
Put another way, let’s go back to the Pokémon Go example. If you play the game and you see a creature in your living room, that’s AR. Now let’s say you played the game, only this time you put on a headset and in that headset, you are presented the image of a fictional forest where the creature appears, that’s VR. AR adds to the real world while VR creates virtual ones.
It’s an important distinction to make. While VR to some is every bit as enticing an investment as AR, some companies have chosen to prioritize the development of AR over VR, and vice versa.
With that caveat out of the way, let’s get you to a list of augmented reality stocks that could really see their value spike if they are able to successfully deliver on the AR promise.
4 Stocks to Watch in Augmented Reality
You had to see this one coming. After all, when the CEO of one of the most profitable companies in the world is an evangelist on a particular tech, investors should take notice.
Tim Cook is obviously impressed—maybe even enamored—with AR’s potential, and that should be all you need to know. Apple’s massive and impressive development arm is certain to be focusing on a number of novel and potentially game changing applications with the tech. After all, since the “Apple Watch” hardly turned into the next iPhone or “iPad” that Apple hoped it would be, the company is on the hunt for the next must-own device. Something that is AR capable may just be the innovation the company needs to push itself over the edge.
Take, for example, the hotly anticipated “iPhone 8.” The next generation of the company’s flagship offering is rumored to potentially have AR capabilities. While still unconfirmed, the iPhone 8 is shaping up to be Apple’s biggest push for innovation with the handset in years as the company reaches the 10th anniversary of the famed device. If the company features AR as a top selling point on one of the most important models of the iPhone ever, that shows just how much trust Apple has in the technology.
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
AMD stock is up over 13% so far in the new year, building on its 600% skyrocketing over the past 12 months. While not entirely thanks to AR, the chip maker is benefiting off a number of new applications for its products.
Couple that with the announcement that the company will be releasing a headset that can handle both AR and VR, and there’s plenty of reasons to be bullish on the tech company. (Source: “AMD takes on Oculus and Vive with Sulon Q VR and AR headset,” WIRED, March 15, 2016.)
If you’re investing in augmented reality, you could do a lot worse than one of 2016’s hottest tech stocks.
3. Microsoft Corporation (NASDAQ:MSFT)
As Apple’s eternal rival, you could hardly expect Microsoft to sit this tech race out.
Microsoft is putting a lot of effort into making its “HoloLens” augmented reality headset a must-own VR offering. In January, the company purchased a small Swedish startup called Simplygon in order to leverage its expertise in 3D animated media into improving HoloLens. (Source: “Microsoft Bought This Startup To Improve Its HoloLens Augmented Reality Tech,” Fortune, January 17, 2017.)
HoloLens released to developers and businesses in February 2016 for $3,000 and currently has no consumer release date, but the company is still looking to push the limits of what the AR headset can do. Simplygon’s recent acquisition shows that Microsoft is focused on getting things right before letting the world interact with the HoloLens.
4. Facebook Inc (NASDAQ:FB)
Rounding out this list is another one of tech’s biggest players, Facebook.
Looking at the names involved in AR alone and how many resources they’ve invested in the technology should be a clue to how its entrance into the mainstream could be game changing.
Facebook went all in on VR with its “Oculus Rift” headset, but the company has also said that it views AR as a big part of its long-term plans. One important distinction, however, is that CEO Mark Zuckerberg views AR as being more focused on phones versus separate devices like a headset or glasses. (Source: “Zuck says augmented reality will flourish on phones before glasses,” TechCrunch, July 28, 2016.)
Answering a question about Pokémon Go and AR tech back in the summer during a conference call falling the Q2 results, Zuckerberg expands on his view of AR:
I like everyone else am enjoying Pokemon Go. The biggest thing that I think we can take away from this as we invest in augmented reality in addition to virtual reality is that the phone is probably going to be the mainstream consumer platform [where] a lot of these AR features first become mainstream, rather than a glasses form factor that people will wear on their face.
Glasses or headset, though, the writing is on the wall: AR could be huge.
Should You Invest in Augmented Reality Stocks in 2017?
Investing in augmented reality is really about timing at this point.
You saw the list of augmented reality stocks above. They’re not exactly lesser-known tickers. Which means that putting money in these companies is betting on a lot more than just AR tech.
But here’s the thing: If one of these companies can be the first to hit it big in the consumer mass market with an AR offering, expect that to be a huge boon to shares.
Which isn’t to say that there can only be one winner, but much the same way that the iPhone is still one of the most dominant smartphones around, the company that is able to capitalize first on AR’s potential may secure itself a major market share for years to come.
The question then falls to which company will be the one to hit the jackpot and make AR a global phenomenon? Each company’s tech development has its strengths and weaknesses, and each is focusing on different projected trends.
For instance, Microsoft believes that AR lies in headsets, while Zuckerberg showed that he views the phone as the primary vehicle of delivery. Apple looks to be siding with Facebook, while AMD has hedged its bets by going for both VR and AR functionalities in a single device.
Who’s right and who’s wrong will not be decided today, tomorrow, or maybe even this year. But for the company on the right track, AR tech could send shares soaring.