Augmented reality is becoming an increasingly popular integration for mobile games and apps, but has to compete with similar technologies like virtual reality. Here’s what investors should consider before making a purchase.
What are augmented reality stocks?
Augmented reality stocks are stocks from companies that design or produce augmented reality (AR) hardware or software — including chipsets, 3D sensors, headsets, haptic technology, laser projections, varifocal displays and semiconductors.
What is augmented reality?
AR is a form of technology that superimposes sounds and images onto what we observe. In this way, augmented reality tweaks our experience of the world around us by adding to what we perceive. The technology typically requires a lens-equipped screen to operate — like the camera on your mobile device — but can also rely on laser projections.
Since augmented reality is a screen-dependent technology, we typically experience AR through a mobile device. Today, a number of mobile games make use of AR technology, including Pokemon Go, Ingress and Harry Potter: Wizards Unite. But the technology can be used in a variety of other ways, too — including AR projections to assist complex neurosurgeries and projections on fighter planes to assist pilots with speed and navigation.
Augmented reality vs. virtual reality
While sometimes used interchangeably, augmented reality and virtual reality are two different sets of technologies. While augmented reality adds to the observable environment, virtual reality aims to replace it entirely.
Virtual reality (VR) is a computer-simulated experience that allows users to interact with a simulated 3D environment. To access this technology, you often need some form of wearable technology, like a VR headset or head-mounted display. Today, virtual reality is being used in video games, training simulators, real-estate tours, online retail, architectural design and more.
Why invest in augmented reality stocks?
Augmented reality is an emerging technology that is chock-full of potential. And market projections are promising.
According to Mordor Intelligence, the global AR market was worth $882 million in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 55.8% from 2020 to 2025. During this time, over 800 million smartphones will be equipped with AR-supporting technology. And other market sectors, like the automotive industry, are also integrating the technology into new models with heads-up displays and AR co-drivers.
Augmented reality is a flexible and adaptive technology with a myriad of practical, real-world applications. Not only do investors have the opportunity to back progressive new technology — they have the opportunity to invest in something they may actually use, both now and in the future.
Risks of investing in augmented reality
Augmented reality is a technology on an upward trajectory, but there are investment risks to consider — namely: data protection regulations and market competitors.
Tech companies have come under public scrutiny in the past for infringing on data privacy rights. AR technology is particularly reliant on consumer locations and cameras to operate. Enhanced data protection regulations could impact the industry’s process and hamper growth.
Another consideration is market competitors. Potential is no guarantee of growth and close competitors in the virtual reality and mixed reality markets may take aim at AR companies by targeting the same consumer base.
Augmented reality stocks
Augmented reality is a complex technology with many moving parts, including chipsets, sensors, headsets and varifocal displays. While there are few pure-play augmented reality stocks — companies that focus on augmented reality and nothing else — you can add AR technology to your portfolio by investing in companies that contribute to the technology.
The list below shows some of the augmented reality stocks Canadian investors can buy into on either Canadian or US exchanges. If you’re interested in a specific company, take some time to carefully research it — including its history and financials — before you buy in.
Spectra7 Microsystems Inc. (TSXV: SEV.V). VR company developing AR glasses and headsets.
Ydreams Global (TSXV: YDX). VR and AR solutions for various concept spaces, immersive exhibits and interactive museums.
ARHT Media Inc. (TSXV: ART.V). Augmented Reality Holographic Telepresence technology (transmission of lifelike images)
Nintendo Co., Ltd. (OTC Markets, Pink Sheets: NTDOY). Develops AR video games. Owns 32% of The Pokemon Company, which collaborated with Niantic (privately owned) to develop the multi-billion dollar mobile AR game, Pokemon Go.
ServiceNow, Inc. (NYSE: NOW). Integrated with CareAR in June, 2020, to provide enterprise-level visual support solutions for customers, employees and field workers.
Snap Inc. (NYSE: SNAP). AR technology for cameras and Snapchat users.
Sony Corporation (NYSE: SNE). Developer of the AR SmartEyeglass and the Envision TV AR app, which uses AR to show users how Sony TVs will look in their homes.
Bosch Limited (NSE: BOSCHLTD). A leading developer of “heads up display” (HUD) AR technology for vehicles.
What ETFs track the augmented reality category?
Most of the ETFs that offer exposure to augmented reality stocks are heavily weighted with software and robotics companies.
Besides Canadian ETFs, you can also explore ETFs that trade on stock exchanges in other countries like the NYSE in the US. There are several Canadian-based brokerages that offer access to international exchanges on which you can buy ETFs including Interactive Brokers and Questrade.
Horizons Robotics and Automation Index ETF (TSX: RBOT)
CI First Asset Tech Giants Covered Call ETF Common Units (TSX: TXF)
Evolve E-Gaming Index ETF (TSX: HERO)
TD Global Technology Leaders Index ETF (TSX: TEC)
Communication Services SPDR Fund (NYSEARCA: XLC)
Roundhill BITKRAFT Esports & Digital Entertainment ETF (NYSEARCA: NERD)
SPDR S&P Kensho New Economies Composite ETF (NYSEARCA: KOMP)
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Bottom line
Augmented reality is a growing technology many of us can access through our mobile devices — but it isn’t without its risks. Data protection regulations and pressure from competing technologies may pose threats to this industry’s development.
Explore your brokerage account options across multiple platforms to find the account that best meets your needs.
Frequently asked questions
Some do, including Nintendo Co., Ltd. (OTC Markets, Pink Sheets: NTDOY), Sony Corporation (NYSE: SNE) and Bosch Limited (NSE: BOSCHLTD). However, not all companies pay dividends like ServiceNow, Inc. (NYSE: NOW) and Snap Inc. (NYSE: SNAP). You can check whether a company pays dividends by visiting its website or by viewing its financials on sites like Yahoo Finance.
Yes, there are many augmented reality penny stocks available for purchase, including Spectra7 Microsystems Inc. (TSXV: SEV), Ydreams Global (TSXV: YDX) and ARHT Media Inc. (TSXV: ART.V).
Image from Getty Images
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Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga.
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