This article presents an overview of the 5 Best Augmented Reality Stocks To Invest In. For a detailed overview of such stocks read our article, 17 Best Augmented Reality Stocks To Invest In.
5. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 110
Advanced Micro Devices Inc. (NASDAQ:AMD) plays a critical role in the AR industry by providing chips that power immersive experience in many important AR and VR device. Back in 2021, Magic Leap, which makes head-mounted augmented reality display devices, announced that it was partnering with Advanced Micro Devices Inc. (NASDAQ:AMD) according to which the chipmaker will make semi-custom SOC for Magic Leap. Recently, Advanced Micro Devices Inc. (NASDAQ:AMD) said it is helping Magic Leap make devices that help firefighters get advanced training to tackle high risk scenarios using augmented and virtual reality without ever putting them in harm’s way.
Artisan Global Opportunities Fund made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2023 investor letter:
“Among our top contributors were Advanced Micro Devices, Inc. (NASDAQ:AMD), NU Holdings and Netflix. AMD’s data center CPUs are used in the cloud service provider (CSP) servers. In addition to the broader secular tailwind from cloud adoption, the company has a performance and pricing advantage over Intel, which we believe will enable it to continue capturing market share. However, the recent stock price rally was due to growing excitement around the company’s AI exposure. It will launch its new MI300 graphics processing unit (GPU) chip later this year to compete against the dominant market leader NVIDIA. Similar to its approach that won market share from Intel within the CPU market, AMD’s product will aim to provide similar performance at a more attractive price. AMD is already working with Microsoft and Meta, while Amazon publicly stated that it is evaluating AMD’s inferencing chips. Using assumptions around the total GPU market size, potential market share gains and price points, our research indicates this could be a $20 billion opportunity for AMD. That would nearly double its revenue. While the company has not historically missed many deadlines, there is execution risk as it works to manufacture and distribute these complex chips at scale, which, combined with an elevated valuation after the stock’s strong performance run, led us to trim the position.”
4. Adobe Inc (NASDAQ:ADBE)
Number of Hedge Fund Investors: 112
Adobe Inc (NASDAQ:ADBE) ranks 4th in our list of the best augmented reality stocks hedge fund are buying. Adobe Inc (NASDAQ:ADBE) offers Adobe Aero, a software that allows developers to make AR-based virtual worlds.
As of the end of the third quarter of 2023, 112 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Adobe Inc (NASDAQ:ADBE).
Here is what Polen Global Growth has to say about Adobe Inc. (NASDAQ:ADBE) in its Q3 2023 investor letter:
“Both Alphabet and Adobe’s businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 134
Apple Inc (NASDAQ:AAPL) upped its AR and VR game by launching the much-awaited $3500 Apple Vision Pro mixed reality headset.
TF International Securities analyst Ming-Chi Kuo recently said in a note that Vision Pro is likely to sell out.
“If not, Vision Pro may take longer to become a success, which would be detrimental to the short-term stock price performance of Apple and its supply chain,” Ming-Chi Kuo added.
Wedgewood Partners stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL) was also a top contributor to performance during the fourth quarter. The Company’s services segment revenue growth accelerated to +16% over last year, one of the fastest growth rates since Covid-19 lockdowns, helping drive +11% growth in earnings per share. The strength in the Company’s services segment was aided by over 1 billion paid subscribers across Apple’s media platforms. We estimate that there are more than 2 billion iOS devices in Apple’s global installed base, which still represents a very large addressable share of their current subscriber count. Apple also continues to innovate across its hardware portfolio, with custom silicon for nearly all its device form factors. More recently, the Company launched its new line of Mac computers, which included their M3 family of chips, including the M3 Max, which contains up to an astonishing 92 billion transistors. Apple’s long-term strategy of creating products with customized hardware and software should continue to differentiate their products and help drive solid revenue growth and expense leverage across the Company’s ecosystem.”
2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 180
NVIDIA Corp’s (NASDAQ:NVDA) chips are used in several AR and VR devices and the company offers several product suites especially designed to enhance extended reality and immersive reality experiences. For example, its NVIDIA CloudXR™ Suite enables XR applications to stream high-fidelity extended reality (XR) to Android and iOS devices over performant networks. NVIDIA Corp (NASDAQ:NVDA) also offers SDKs for AR and VR development.
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA):
“Much of that differential can be attributed to the performance of the Magnificent Seven (Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla), a basket of mega cap growth stocks that accounted for 47.8% of the benchmark return for the quarter and 65.4% for 2023.
The ClearBridge Large Cap Growth Strategy maintains exposure to six of the seven stocks, with overweights in Amazon.com, Meta and NVIDIA Corporation (NASDAQ:NVDA). Those three stocks, as well as Microsoft, were among the leading contributors to Strategy performance for the quarter. Microsoft and Nvidia continued to be supported by strong execution and leadership positions in the implementation of generative artificial intelligence (AI).
These are high-quality, cash flow generative businesses that we will continue to own, actively adjusting our positioning sizes based on risk/reward and portfolio construction priorities. With Nvidia shares more than tripling in 2023, we opportunistically took profits throughout the year, an approach that continued in the fourth quarter with additional trims that brought the position down to 6% of overall assets.
Active management of our mega cap exposure contributed to the Strategy outperforming the benchmark both in the fourth quarter and through the narrow leadership market of 2023. We also attribute these improved results to solid stock picking, being opportunistic in adding to or initiating new positions in growth companies at or near the bottom of their earnings cycle, and maintaining a commitment to diversification across our three buckets of growth: select, stable and cyclical.”
1. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Investors: 234
With its Reality Labs division working full time on AR and VR related products and Quest headsets, Meta Platforms is the leading AR stock hedge funds are investing in. Mark Zuckerberg envisions AR glasses to start replacing smartphones in the future, and this is the source of Meta Platforms’ continuous investments in this space. The Verge reported last year that Meta Platforms plans to release its first pair of smart glasses with a display and a neural interface smartwatch designed to control them by 2025.
Wedgewood Partners stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a leading contributor to performance for the quarter – and the year. Core advertising revenue growth accelerated to +23% while operating margin rebounded strongly from a year ago. The Company has been a consistent beneficiary of artificial intelligence (AI) over the past several years, investing aggressively in deep learning recommendation systems that help power its products, which reach nearly half the population of the planet. Meta Platform’s AI investments, combined with its massive scale, allow the Company to quickly spin up new products across its digital advertising real estate to reinforce its competitive positioning. For example, the Company’s relatively new Reels product is just over two years old, yet it has driven a +40% increase in the time Instagram users spend on the app. Reels content and other content served up to Instagram users is often driven by several very large and expensive AI recommendation systems that must sort through billions of datapoints in real time and come up with a probability of a user engagement. The Company is one of the few companies that has been able to consistently and profitably monetize AI technologies for shareholders and we continue to hold it has a top position in our portfolios.”
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