An exciting segment within the equities space, augmented reality stocks center on a mainline catalyst: the prospect for tremendous growth.
According to Grand View Research, the global AR market reached a valuation of $57.26 billion last year. By 2030, experts project that the segment could expand at a compound annual growth rate (CAGR) of 39.8%. If so, the ecosystem may be worth $597.54 billion at the forecast culmination point.
On a fundamental level, AR platforms offer a range of applications and functionalities. Per Grand View Research, the technology can be used in diverse areas such as education, training and entertainment. In addition, AR use has increased in industries such as logistics, healthcare and manufacturing.
Moving forward, AR may play a significant role in boosting economic productivity. By juxtaposing digital overlays on physical objects, training protocols can be taught through a more productive and intuitive approach. Combined with other uses, these augmented reality stocks could soon find themselves swinging higher.
Qualcomm (QCOM)
I want to be clear about wireless technology specialist Qualcomm (NASDAQ:QCOM). While I appreciate the underlying utility and relevance of the tech giant, QCOM stock faces some risks. It has skyrocketed in short order but it has struggled amid broader sector uncertainties. Therefore, waiting for a more reasonable valuation may be prudent.
Personally, I’d wait to see if QCOM can’t fall to $140. If it does get to that point, though, I’d be all over it like stink on…well, I’d be all over it. What makes Qualcomm a top idea among augmented reality stocks is that the company provides the processors and chipsets for AR-enabled devices. As consumers expect more interactivity with their platforms, QCOM should see increased demand.
What shouldn’t be overlooked is that the company has been consistently delivering the goods. In the past four quarters, it posted an average earnings per share of $2.27. This figure beat out the collective consensus view of $2.10, yielding an earnings surprise of 7.58%.
Fiscal 2024 projections call for EPS of $9.92 on sales of $38.39 billion. Both represent a decent uptick against prior year results. Thus, QCOM ranks among the top augmented reality stocks.
Vuzix (VUZI)
One of the riskier but also popular ideas among augmented reality stocks, Vuzix (NASDAQ:VUZI) is a designer, manufacturer and marketer of smart glasses. It also develops AR technologies and products for various markets, including enterprise, medical, defense and consumer. One of the company’s mainline products is a head-mounted smart personal display.
Although VUZI stock attracts plenty of attention among speculators, its financials present some challenges. For one thing, the company isn’t profitable. In the past four quarters, it posted an average loss per share of 19 cents. This figure was unfavorably larger than the expected loss of 15 cents per share. Therefore, the “earnings” surprise came out to 27.5% below parity.
Still, one positive may be that VUZI trades at 8.47X trailing-year sales. That’s high on an objective basis. However, between the first quarter of 2023 to Q1 2024, the metric stood at 15.27X. So in that sense, VUZI may be relatively undervalued.
By year’s end, analysts project a 4.3% dip in the top line to $11.61 million. However, the high-side estimate calls for $13.73 million. If Vuzix can somehow string some positive results together, the underlying equity could shoot higher.
Snap (SNAP)
Falling under the Internet content and information industry, Snap (NYSE:SNAP) used to be a rising player among augmented reality stocks. Its main claim to fame involves filters and lenses, driving home the entertainment angle of AR. Unfortunately, the severe loss of equity value from the highs of 2021 convinced many to ignore SNAP.
However, for speculators, the social media specialist could be an intriguing proposition. Over the past 52 weeks, SNAP stock gained almost 17%. In the right circumstances, the company could surprise people. It also deserves some more respect. In the past four quarters, Snap posted an average EPS of 3 cents. During the period, analysts expected a loss per share of 2 cents.
Over the past year, SNAP stock traded at a trailing-year sales multiple of 4.25X. Right now, this multiple stands at 4.87X, which isn’t too large of a premium bump. What’s enticing here is that by the end of fiscal 2024, analysts project that revenue may hit $5.37 billion. That’s up 24.8% from last year’s tally of $4.3 billion.
By fiscal 2025, sales could rise another 14.8% to $6.16 billion. For the daredevil, SNAP may be one of the augmented reality stocks to consider.
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.