- The virtual reality market will grow in the coming years
- Meta, Sony ( TYO 🙂 ), Apple and Alphabet are challenging the dominance
- Among these giants, Meta becomes the best option to expose itself to the potential growth of the VR space
The world of virtual reality (VR) has seen a surge of investor enthusiasm fueled by recent developments. Apple’s (NASDAQ: ) long-awaited Visio Pro virtual reality headset, set to launch in early 2024, has been generating a lot of buzz.
Additionally, the recent unveiling of Meta’s (NASDAQ: ) Quest 3, which Mark Zuckerberg touted as “the most powerful on the market,” further fueled interest in the VR sector.
Although the concept of virtual reality has been around since the 1990s, recent technological advances have finally made it possible to create virtual reality devices that offer rich features and are accessible to a wider audience.
As a result, VR-related stocks are attracting more investor attention than ever.
Virtual reality: a market with a bright medium-term future
According to analysts, the virtual reality market is expected to explode in the coming years. The global virtual reality headset market is expected to register a CAGR of 5.3% between now and 2023, according to Vantage Market Research.
Grand View Research’s forecasts are even more optimistic and suggest that the global virtual reality market should develop at an annual growth rate of 15% between 2022 and 2030.
In addition to gaming and entertainment, VR technology finds applications in fields as diverse as education, engineering and design, healthcare, and defense.
In short, this is a market with a bright future in the coming years.
Companies with a wide variety of profiles can benefit, from specialized computer chip makers like NVIDIA (NASDAQ: ) or Qualcomm (NASDAQ: ) to those who know best how to use virtual reality to grow their business.
Which companies will win?
For virtual reality hardware such as headsets, joysticks and other accessories – only a few companies share the market. The leader is undoubtedly Meta, which has captured more than 50% of the virtual reality headset market with its Oculus (NASDAQ: ), according to International Data Corporation.
This is not surprising, considering that Meta has positioned itself as a leader in the concept of metauniverse, having invested heavily in this area for several years, and considering that metauniverse cannot exist without high-performance virtual reality equipment.
After the presentation of the new Oculus 3 virtual reality headset, Thomas Monteiro, senior analyst at Investing.com, said:
Meta remains the main contender to dominate the virtual reality market, mainly thanks to Zuckerberg’s huge investment in the segment, which has outstripped the competition in 2021 and 2022.
While the company has since shifted focus, cutting costs and offering what Zuckerberg called efficient wealth management, it will be some time before others catch up to those years.
However, the perception of a market leader has a downside: high expectations from shareholders. In that sense, I see Meta leadership as a double-edged sword, and any setbacks along the way will be scrutinized, likely leading to stock volatility.
Sony (NYSE: ) is in second place with 27% market share, but it’s important to note that its headset is designed specifically for gaming and requires a PlayStation 5 to work, making it a much better option than the Meta headset.
However, soon we will have to count on the appearance of new players in this market, among them Apple, as we noted at the beginning of the article, although the announced price of its headphones ($3500) keeps them in a very specific category. users.
Alphabet (NASDAQ: ), which will release its own virtual reality headset next year, is also looking to gain a foothold in virtual reality and could be Meta’s toughest competitor given its huge user base.
In this analysis, we’ll ask which stocks are the best buys for investors looking to get exposure to virtual reality headset makers (or future makers), comparing Meta Platforms, Sony, Apple, and Alphabet.
The best things to do to open yourself up to virtual reality
To do this, we start by assembling these stocks into InvestingPro’s extended watchlist, taking into account their upside potential according to analysts and valuation models, as well as InvestingPro’s health indicators in terms of revenue, earnings and cash flow. :
Fuente: InvestingPro
Analysts and valuation models see Apple and Alphabet stocks as fairly well-valued, with limited or even negative upside potential.
According to analysts who consider the stock undervalued, Sony has a nice upside of 33.1%, but InvestingPro’s fair value, which uses several well-known financial models, suggests almost zero upside.
In addition, the company’s growth and cash flow numbers are well below average.
Meta, for its part, has upside potential of more than 21%, according to Fair Value. Analysts who consider the stock undervalued see potential growth of almost 26%.
Based on the data analyzed here, Meta has the best potential of any VR headset stock.
Conclusion
In conclusion, Meta stands out as an attractive option for investors looking to take advantage of the virtual reality (VR) market.
With significant leadership in technology development and market share, combined with its significant commitment to VR, the company offers a clear advantage.
In particular, InvestingPro data shows that Meta has the strongest financial position and the most promising growth potential in this exciting investment landscape.
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Disclaimer: This article is written for informational purposes only; It is not a solicitation, offer, advice, counsel or investment recommendation and therefore is not intended to encourage the purchase of assets in any way. We remind you that any type of asset is evaluated from different points of view and is very risky, so any investment decision and the risk associated with it remain with the investor. The author does not own the shares mentioned in the analysis.
