Virtual reality has shifted from sci-fi speculation to real-world tech. But is there a viable industry beneath the hype? Investors may need to be patient if they plan to invest in this sector.
What is virtual reality?
Virtual reality (VR) is a computer-generated experience that allows users to interact with a simulated 3D environment. People typically access this environment with the help of a VR headset, or head-mounted display, like the Oculus Quest, PlayStation VR or Microsoft HoloLens. Virtual content can also be projected onto room-sized screens, but wearable technology is far more popular and accessible.
Virtual reality is an emerging technology with the potential for widespread popularity and adoption. Many of us got our first taste of VR by watching 3D films. But today, virtual reality has expanded into video games, training simulators, real-estate tours, online retail, architectural design and more.
Virtual reality stocks are from companies that design or produce VR software and hardware. Most big names in virtual reality are tech companies with budgets big enough to support a VR program — think Google, Microsoft and Sony. These companies don’t exclusively focus on virtual reality but have the resources and capital to devote to a VR program.
Virtual reality vs. augmented reality
Spend any time digging into the technology behind virtual reality, and you’ll invariably stumble across augmented reality (AR). Like virtual reality, augmented reality also tweaks our interpretation of the world around us. But instead of immersing the user in a simulated environment, augmented reality simulates an artificial object in real space.
Augmented reality requires a screen to superimpose its artificial object onto what we observe. One of the better-known examples of this technology is utilized by the mobile game Pokemon Go. Users open the game on their phone and use the camera built into their device to observe the world around them — with a simulated image of a Pokemon thrown into the mix.
Why invest in VR stocks?
Virtual reality represents a shift in how we interact with technology and our environment — and it’s gaining traction. After Facebook dropped $2 billion on Oculus Rift in 2014, a number of other tech giants decided to make a play for VR tech, including Amazon, Apple, Intel and Google.
The market is poised for growth, and the tech giants are in the game, many having taken big steps to flesh out their VR programs. A lineup of consumer headsets hit the market in 2016, and since then, apps, content and hardware have continued to expand.
Beyond the potential for growth, investors may be interested in the VR market for its growing list of practical applications. This is an opportunity to back technology you may actually use and benefit from — now and in the future.
Risks of investing in VR stocks
Virtual reality is becoming increasingly popular, but there are investment risks to consider, including slow industry growth and the technology’s novelty status.
When Zuckerberg splashed big cash on Oculus Rift, he made a prediction about the potential of the VR market. And that investment hasn’t quite paid off — at least not yet. The industry is growing — that much is clear. But how long will it take to become truly profitable?
Experts anticipated VR headsets would be all the rage when they first hit shelves. But for the most part, sales fell flat. The high price tag could have something to do with it — the Oculus Rift costs $399, and the Vive Cosmos retails for $699. Granted, there are cheaper options on the market, but as it stands, consumers need to be prepared for a hefty price tag if they want a high-quality VR experience.
The reality is that consumer spending is a huge slice of the VR market, and in many cases, this technology is still seen as a novelty. Investors interested in VR stocks will need to be prepared to sit tight — for a number of years, potentially — while virtual reality evolves from novelty to necessity.
Virtual reality stocks
There are few pure-play virtual reality stocks — that is to say, there are few companies that focus on virtual reality technology and nothing else. To add VR technology to your portfolio, be prepared to invest in technology companies that do more than VR.
See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.
Company summary
Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.
Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.
Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod. It also provides AppleCare support and cloud services; and operates various platforms, including the App Store that allow customers to discover and download applications and digital content, such as books, music, video, games, and podcasts. In addition, the company offers various services, such as Apple Arcade, a game subscription service; Apple Fitness+, a personalized fitness service; Apple Music, which offers users a curated listening experience with on-demand radio stations; Apple News+, a subscription news and magazine service; Apple TV+, which offers exclusive original content; Apple Card, a co-branded credit card; and Apple Pay, a cashless payment service, as well as licenses its intellectual property. The company serves consumers, and small and mid-sized businesses; and the education, enterprise, and government markets. It distributes third-party applications for its products through the App Store. The company also sells its products through its retail and online stores, and direct sales force; and third-party cellular network carriers, wholesalers, retailers, and resellers. Apple Inc. was founded in 1976 and is headquartered in Cupertino, California.
Meta Platforms, Inc. develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment's products include Facebook, which enables people to share, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, groups, and businesses across platforms and devices through chat, audio and video calls, and rooms; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately. The Reality Labs segment provides augmented and virtual reality related products comprising virtual reality hardware, software, and content that help people feel connected, anytime, and anywhere. The company was formerly known as Facebook, Inc. and changed its name to Meta Platforms, Inc. in October 2021. Meta Platforms, Inc. was incorporated in 2004 and is headquartered in Menlo Park, California.
Himax Technologies, Inc., a fabless semiconductor company, provides display imaging processing technologies in China, Taiwan, the Philippines, Korea, Japan, Europe, and the United States. The company operates in two segments, Driver IC and Non-Driver Products. It offers display driver integrated circuits (ICs) and timing controllers that are used in televisions, PC monitors, laptops, mobile phones, tablets, automotive, ePaper devices, industrial displays, and other products. The company also provides automotive IC solutions, including traditional driver ICs; advanced in-cell touch and display driver integration; large touch and display driver integration; and local dimming timing controllers, as well as active matrix organic light-emitting diode (AMOLED) solutions, including AMOLED drivers, timing controllers, and touch controller ICs. In addition, it offers application specific IC services; liquid crystal on silicon and micro-electro mechanical system products; Power ICs; complementary metal oxide semiconductor image sensor products; wafer level optics products; 3D sensing products; and ultralow power WiseEye smart image sensing products. The company markets its display drivers to panel manufacturers, mobile device module manufacturers, and manufacturers of end-use products. Himax Technologies, Inc. was incorporated in 2001 and is headquartered in Tainan City, Taiwan.
Intel Corporation designs, develops, manufactures, markets, and sells computing and related products and services worldwide. It operates through Client Computing Group, Data Center and AI, Network and Edge, Mobileye, and Intel Foundry Services segments. The company's products portfolio comprises central processing units and chipsets, system-on-chips (SoCs), and multichip packages; mobile and desktop processors; hardware products comprising graphics processing units (GPUs), domain-specific accelerators, and field programmable gate arrays (FPGAs); and memory and storage, connectivity and networking, and other semiconductor products. It also offers silicon devices and software products; and optimization solutions for workloads, such as AI, cryptography, security, storage, networking, and leverages various features supporting diverse compute environments. In addition, the company develops and deploys advanced driver assistance systems (ADAS), and autonomous driving technologies and solutions; and provides advanced process technologies backed by an ecosystem of IP, EDA, and design services, as well as systems of chips, including advanced packaging technologies, software and accelerate bring-up, and integration of chips and driving standards. Further, it delivers and deploys intelligent edge platforms that allow developers to achieve agility and drive automation using AI for efficient operations with data integrity, as well as provides hardware and software platforms, tools, and ecosystem partnerships for digital transformation from the cloud to edge. The company serves original equipment manufacturers, original design manufacturers, cloud service providers, and other manufacturers and service providers. It has a strategic agreement with Synopsys, Inc. to develop EDA and IP solutions; and ARM that enables chip designers to build optimized compute SoCs on the Intel 18A process. Intel Corporation was incorporated in 1968 and is headquartered in Santa Clara, California.
Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.
QUALCOMM Incorporated engages in the development and commercialization of foundational technologies for the wireless industry worldwide. It operates through three segments: Qualcomm CDMA Technologies (QCT); Qualcomm Technology Licensing (QTL); and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in wireless voice and data communications, networking, computing, multimedia, and position location products. The QTL segment grants licenses or provides rights to use portions of its intellectual property portfolio, which include various patent rights useful in the manufacture and sale of wireless products comprising products implementing CDMA2000, WCDMA, LTE and/or OFDMA-based 5G standards and their derivatives. The QSI segment invests in early-stage companies in various industries, including 5G, artificial intelligence, automotive, consumer, enterprise, cloud, IoT, and extended reality, and investments, including non-marketable equity securities and, to a lesser extent, marketable equity securities, and convertible debt instruments. It also provides development, and other services and related products to the United States government agencies and their contractors. The company was incorporated in 1985 and is headquartered in San Diego, California.
Snap Inc. operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight that enable people to communicate visually through short videos and images. It also provides Spectacles, an eyewear product that connects with Snapchat and captures photos and video from a human perspective; and advertising products, including AR ads and Snap ads comprises a single image or video ads, collection ads, dynamic ads, story ads, and commercials. The company was formerly known as Snapchat, Inc. and changed its name to Snap Inc. in September 2016. Snap Inc. was founded in 2010 and is headquartered in Santa Monica, California.
Sony Group Corporation designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets worldwide. The company distributes software titles and add-on content through digital networks; network services related to game, video, and music content; and home and portable game consoles, packaged software, and peripheral devices. It also develops, produces, markets, and distributes recorded music; publishes music; and produces and distributes animation titles, game applications based on animation titles, and various services for music and visual products. In addition, the company produces, acquires, and distributes live-action and animated motion pictures for theatrical release, as well as scripted and animated series, unscripted reality or light entertainment, daytime serials, game shows, television movies, and miniseries and other television programs; operates a visual effects and animation unit; manages a studio facility; and operates television and digital networks, and post-production facilities. Further, it researches, develops, designs, produces, markets, distributes, sells, and services televisions, and video and sound products; interchangeable lens, compact digital, and consumer and professional video cameras; projectors and medical equipment; mobile phones, tablets, accessories, and applications; and metal oxide semiconductor image sensors, charge-coupled devices, large-scale integration systems, and other semiconductors. Additionally, it offers Internet broadband network services; creates and distributes content for PCs and mobile phones; and provides life and non-life insurance, banking, and other services, as well as batteries, recording media, and storage media products. The company was formerly known as Sony Corporation and changed its name to Sony Group Corporation in April 2021. Sony Group Corporation was incorporated in 1946 and is headquartered in Tokyo, Japan.
Historical performance
Stock information
Market capitalization: $129214529536
P/E ratio: 13.5165
PEG ratio: 1.9414
Dividend yield: 0.0044%
What ETFs track the virtual reality category?
Most ETFs that offer exposure to virtual reality stocks are heavily weighted with software and robotics companies.
Communication Services SPDR Fund (XLC)
Global X Robotics & Artificial Intelligence ETF (BOTZ)
Invesco QQQ (QQQ)
Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD)
SPDR S&P Kensho New Economies Composite ETF (KOMP)
VanEck Vectors Semiconductor ETF (SMH)
How to buy virtual reality stocks
Eager to invest in virtual reality? Here’s a quick breakdown of the investment process.
1. Research stocks
There aren’t many pure-play VR stocks, so the first step in your research will involve identifying those tech companies with virtual reality programs.
When sizing up prospective VR stocks, look at the company’s history. Startups have growth potential but can be volatile. Established companies offer more security but may be pricey to purchase.
You’ll also want to make sure you understand what the company does and what its plans are for its VR program. Taking time to research the company you’re interested in will help you make informed, targeted investment decisions.
2. Open a brokerage account
Next, you’ll want to open a brokerage account. There are plenty of online brokerages to choose from, but no two platforms are the same.
If you’re new to trading, explore the offerings of beginner-friendly brokerages like Robinhood and Stash. If you’ve got some investment experience under your belt, opt for a platform with more extensive research tools, like Interactive Brokers.
3. Purchase stocks
After opening and funding your brokerage account, you’re ready to select and purchase stocks. Search for the stock by company name or ticker symbol. Once you’ve found the stock you want to buy, enter the number of shares you’d like to purchase and submit the order.
You can track the performance of your investments by logging into your brokerage account.
Virtual reality market projections
The VR market was worth $6.1 billion in 2020, and this figure is expected to rise to $20.9 billion by 2025, reports Market and Markets. Over this period, the industry’s anticipated compound annual growth rate (CAGR) is 27.9%, with the Asia Pacific market representing the largest portion of growth.
In the coming years, the biggest driver for the market will be gaming and entertainment-related head-mounted displays, which have a predicted 38.6% CAGR from 2020 to 2025.
Compare trading platforms
Before you can purchase VR stocks, you’ll need a brokerage account. Explore your options and narrow down top brokerages by available asset types, minimum deposit and more to find the best for your budget and financial goals.
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Bottom line
VR stocks represent an enticing investment opportunity bolstered by a market on an upward trajectory and expanding the technology’s everyday applications. But while experts agree that virtual reality will continue to reach into our everyday lives, the process may take some time.
Some do — including Apple, Himax, Intel and Microsoft.
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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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