5 AR Stocks To Watch: Beyond Apple Vision Pro Hype

Apple’s Vision Pro headset has been generating a lot of buzz, though it remains to be seen whether sales can live up to expectations. Here is a collection of AR stocks to watch in 2024.

• Apple eyes Vision Pro enterprise opportunities, with Nike, SAP and Walmart already investing in the headset.
• Meta is hoping its AR business gets a second wind from Vision Pro, although Reality Labs posted a record operating loss in Q4 2023.
• Alphabet cuts jobs at its AR division but remains committed to AR initiatives, which include a partnership with Samsung.

Apple

The AR Hardware Stock

Apple [AAPL] finally launched the Vision Pro, its first visionOS device, on 2 February, after much hype and anticipation. Wedbush analyst Dan Ives is expecting the Cupertino company to shift approximately 600,000 headsets this year, revised upwards from 460,000 on the back of strong pre-orders. On the Q1 2024 earnings call on the day before launch, Apple CEO Tim Cook said he was “incredibly excited about the enterprise opportunities with Vision Pro”, adding that Nike [NKE], SAP [SAP] and Walmart [WMT] “have started leveraging and investing” in the headset.

Meta Platforms

The Mounting Losses Stock

Meta Platforms [META] is confident that strong Vision Pro sales will give its own AR and VR business a boost. According to the Wall Street Journal, the company is hoping the headset will “reinvigorate its $50bn metaverse effort, which consumers have yet to widely embrace”. Despite bringing in $1bn in revenue in Q4 2023, however, Meta’s metaverse unit Reality Labs posted a record $4.6bn loss in the three months to 31 December. The company expects “losses to increase meaningfully year-over-year due to our ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.”

Alphabet

The Job Cuts Stock

Alphabet [GOOGL] announced last month that it’s cutting thousands of jobs as part of a restructuring, including in its AR division. “Google continues to be deeply committed to other AR initiatives, such as AR experiences in our products and product partnerships,” the company said in a statement to 9to5Google. The Alphabet Workers Union criticised the “unnecessary” layoffs, arguing that they’ll “introduce chaos and instability into the workplace and force workers to make do with less”. According to reports from last year, Google’s partnership with Samsung [005930:KS] to launch mixed reality glasses — internally known as ‘Project Moohan’ — is facing setbacks.

Qualcomm

The Mixed Reality Chip Stock

Last month, Qualcomm [QCOM] unveiled the Snapdragon XR2+ Gen 2, the chip that is ultimately going to power Google and Samsung’s mixed reality hardware. The chip is significantly superior to its predecessor, the XR2 Gen 2, which itself was only unveiled in the second half of last year and is powering Meta’s Quest 3 headset. “We are advancing our commitment to power the best XR devices and experiences that will supercharge our immersive future,” said Hugo Swart, Vice President and General Manager of XR at Qualcomm in the January press release.

Sony

The Integration Stock

Sony [SONY] unveiled its mixed reality headset at the Consumer Technology Association conference last month in Las Vegas. The hardware is powered by Qualcomm’s Snapdragon XR2+ Gen 2 platform and will enable mixed reality content creators to deliver spatial content in 4K resolution with cutting-edge graphics. Sony CEO Kenichiro Yoshida said at the technology show that the hardware would offer a “crisp viewing experience” and “intuitive interaction for 3D design”. The headset should be available later this year, with pricing to be announced at a later date.

Another Way to Invest in AR

The Roundhill Metaverse ETF

The Roundhill Metaverse ETF [METV] holds Apple, Alphabet, Meta, Qualcomm and Sony as of 5 February. As of 31 December, gaming platforms account for 22.7% of the portfolio, while computing components have a 21.8% weighting; cloud solutions and social networks have allocations of 15.8% and 10%. The fund is up 32.1% in the past year through 2 February and up 13.5% in the past six months.

The iShares Future Metaverse Tech and Communications ETF [IVRS] holds Apple, Alphabet, Meta, Qualcomm and Sony as of 2 February. Communications and information technology account for 47.7% and 44.6% respectively; consumer discretionary has a 7.7% weighting. The fund is up 27.9% in the past six months and up 10.8% in the past six months.