All eyes have been on artificial intelligence (AI) this year, with recent advances in chips elevating what is possible with the technology. However, many industries require the same hardware used for AI, with new chips similarly providing a boost to other sectors.
Markets such as virtual reality (VR) are benefiting from more powerful chips and have become attractive growth areas for tech companies. As a result, the industry is expected to expand at a compound annual growth rate of 45% through 2029 (per GlobeNewswire). VR has shown up in various devices for decades but has had trouble garnering mass interest from consumers. However, that could change as the technology expands and has more utility for various activities.
With it still relatively early days for VR, it's not a bad idea to invest in this technology of the future. So, here are two VR stocks to buy this September.
1. Apple
Technically, Apple(NASDAQ: AAPL) hasn't quite entered the VR market yet. However, the company unveiled its first virtual/augmented reality (AR) headset at its Worldwide Developer Conference this past June, with a release date set for 2024.
The long-anticipated device, called the Vision Pro, was rumored for years as Apple made related acquisitions and filed patents. However, it has exceeded expectations by taking leaps in innovation. Rather than a VR/AR headset, the Vision Pro is better labeled as a spatial computer.
It will utilize the same chip as the current MacBook Air, allowing consumers to complete almost any computing task in VR or AR form. Activities such as web browsing, video calling, editing, word processing, and more will be available through the device. Various hand gestures and eye tracking eliminate the need for controllers, often used in competing headsets.
Apple has grown into a position of dominance in consumer tech, snapping up significant market shares in multiple product categories. The company has done this by creating an interconnected ecosystem for its products and offering popular Apple-exclusive apps like Messages and FaceTime. The Vision Pro will have an edge over the competition by similarly offering these features.
Meanwhile, the company is strategically enabling its most popular product, the iPhone, to work with the headset to provide a unique experience. The iPhone 15 will be released on Sept. 22 and will receive an update that allows users to film spatial video to be viewed with the Vision Pro. It's an early step, but it illustrates how Apple will use its other products to attract consumers to the Vision Pro.
Apple's headset will launch at $3,499, pricing out many consumers. However, future generations of the device will likely bring the cost down, making Apple an attractive VR stock for long-term-minded investors
2. Microsoft
While companies like Apple and Sony focus on the consumer side of VR, Microsoft(NASDAQ: MSFT) uniquely targets businesses with its headsets. The company calls its device HoloLens and describes it as "An ergonomic, untethered self-contained holographic device with enterprise-ready applications to increase user accuracy and output."
Examples of applications that Microsoft provides for the headset include manufacturing, engineering and construction, healthcare, and education. The company seeks to boost productivity in various industries with its HoloLens. Microsoft promises to increase efficiency by 90% in manufacturing, decrease ward time in hospitals by 30% with remote consultations, and save an estimated $4 million year in construction costs.
Microsoft offers over 200 partner apps for the HoloLens and boasts clientele such as Volkswagen's Audi, L'Oréal, Mercedes, and more. However, the biggest reason to invest in Microsoft's VR business is its growing position in AI. The company has exclusive access to several of ChatGPT developer OpenAI's AI models, with its 49% stake in the start-up. AI will likely be crucial for producing useful programs for VR headsets, giving Microsoft an edge in the market.
Microsoft shares have climbed nearly 200% over the last five years thanks to consistent revenue gains and ventures into high-growth markets like AI. The company has a solid position in VR, serving the enterprise side of the sector. Its history of growth and unique role in the industry makes its stock an excellent way to invest in the VR market.
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Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Volkswagen Ag. The Motley Fool has a disclosure policy.
