In this article, we will discuss the 5 best virtual reality stocks to buy. If you want to read our complete list of best virtual reality stocks, you can go to 11 Best Virtual Reality Stocks to Buy.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Funds: 110
NVIDIA Corporation (NASDAQ:NVDA) is one of the major technology companies that have been actively pursuing advancements in VR technology. The company first started on it with the launch of Geforce 10 series graphic cards in 2016. In September 2020, NVIDIA Corporation (NASDAQ:NVDA) announced the largest semiconductor acquisition in history, buying Arm Ltd for $40 billion.
Things look positive for NVIDIA Corporation (NASDAQ:NVDA) as it is set to announce its first-quarter results on May 25th. The company has been beating its revenue and EPS estimates for the past couple of years. For the fourth quarter of 2021, NVIDIA Corporation (NASDAQ:NVDA) beat its EPS estimates by $0.10, reporting per share earnings of $1.32. On top of that, the company exceeded its revenue estimates by $213.64 million after generating $7.64 billion.
On May 26, Susquehanna analyst Christopher Rolland lowered the price target of NVIDIA Corporation (NASDAQ:NVDA) from $280 to $260. However, the analyst kept a Positive rating on the company shares.
Here is what RiverPark Funds had to say about NVIDIA Corporation (NASDAQ:NVDA) in their first-quarter 2022 investor letter:
“Nvidia is the leading designer of graphics processing chips (commonly known as GPU’s- graphics processing units), required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming- focused chip vendor to one of the largest semiconductor/software vendors in the world, dominating the core secular growth markets of gaming, data centers and professional visualization. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. For 2021 the company generated 61% revenue growth to $27 billion, expanded its EBITDA margins to over 44% and generated over $8 billion of free cash flow. Over the past five years, the company has generated a cumulative $23 billion of FCF after cumulative capital expenditures of less than $4 billion.
We expect future growth to remain robust as NVDA chips and software are critical to many of the core technologies being adopted globally, including cloud computing, virtual reality and advanced artificial intelligence. As with NFLX, we took advantage of the over 40% recent drop in the company’s shares over the last several months to initiate a small position.”
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Funds: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s new initiative, LiquidVR, is set to revolutionize the virtual reality experience for its users. The initiative allows a fully immersive and comfortable VR experience. The company also has VR-ready CPUs and GPUs. As of June 6, Advanced Micro Devices, Inc. (NASDAQ:AMD) has returned 1,755.15% to its investors in the last 10 years. Furthermore, the acquisition of Xilinx was completed in 2022 and it bears good news for the company.
According to Advanced Micro Devices, Inc. (NASDAQ:AMD)’s Q1 2022 reports, the company posted an EPS of $1.13, compared to $0.93 estimates. Moreover, the company also outperformed the analyst estimates for revenue by $313.37 million after generating $5.89 billion.
According to Insider Monkey’s database, 63 companies had stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD) in the fourth quarter of 2021. Ken Fisher’s Fisher Asset Management held the most significant position in the company, with 19.956 million shares worth $2.87 billion. The fund increased its activity by 27% in the fourth quarter compared to the previous one.
Here is what Carillon Tower Advisers Advanced Micro Devices, Inc. (NASDAQ:AMD) in their fourth-quarter 2021 investor letter:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Funds (Class A shares): 209
Number of Hedge Funds (Class C shares): 158
Alphabet Inc. (NASDAQ:GOOG) started its virtual reality project in 2014 with Google Cardboard. It ranks as the third most valuable technology company by revenue. Alphabet Inc. (NASDAQ:GOOG)’s annual compound growth rate has been 23.3% and it has an operating margin of 30%. Moreover, the EPS CAGR for the company is 32.1%.
According to Alphabet Inc. (NASDAQ:GOOG)’s first-quarter 2022 reports, the company generated $68.01 billion in revenue, an increase of about 23% from the same period last year. Google Cloud remained a prominent factor in the earnings report as it generated $5.8 billion, reflecting a 44% revenue surge.
According to the Insider Monkey database, 158 hedge funds held stakes in Alphabet Inc. (NASDAQ:GOOG) in the fourth quarter of 2021.
Here is what Farrer Wealth Advisors said about Alphabet Inc. (NASDAQ:GOOG) in their first-quarter 2022 investor letter:
“Alphabet: We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Funds: 262
Microsoft Corporation (NASDAQ:MSFT) was the most valuable publicly-traded company till 2010. That was the year Apple Inc. (NASDAQ:AAPL) dethroned the tech giant. However, in the current virtual reality regime, the company is taking the lead. Microsoft Corporation (NASDAQ:MSFT) reported its first-quarter 2022 earnings in March where it beat its EPS estimates by $0.02 after reporting an EPS of $2.22. The company also beat its revenue estimates by $311.18 million after generating $49.36 billion.
On May 13, Tigress Financial analyst Ivan Feinseth reiterated a Buy rating on Microsoft Corporation (NASDAQ:MSFT) shares with a $411 price target. According to the analyst, the company remains a “dominant force” in the gaming industry.
Motiwala Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in their fourth-quarter 2021 investor letter. Here is what the firm said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Funds: 224
The reason Meta Platforms, Inc. (NASDAQ:FB) is the top pick on this list is because of the $10 billion pledge towards the metaverse. It is the concept of a virtual world enabled through VR and AR headsets. On May 18, Guggenheim analyst Michael Morris lowered the price target on Meta Platforms, Inc. (NASDAQ:FB) from $275 to $250 and kept a Buy rating on the stock.
In the first quarter of 2022, Meta Platforms, Inc. (NASDAQ:FB) missed its revenue estimates by nearly $314 million after generating $27.91 billion. On this revenue, the company had an operating income of $11.48 billion. However, Meta Platforms, Inc. (NASDAQ:FB) beat the analyst forecasts by 8.23% after reporting an EPS of $2.72. Furthermore, the company reduced its total year expenses from the range of $90-$95 billion to $87-$92 billion.
Out of 924 hedge funds in the Insider Monkey database, 224 remained bullish on Meta Platforms, Inc. (NASDAQ:FB) in the fourth quarter of 2021. Ken Fisher’s Fisher Asset Management held the biggest stake, with 11.198 million shares worth $2.49 billion. On top of that, the fund increased its activity by 17% in the company compared to the previous quarter.
Meta Platforms, Inc. (NASDAQ:FB) was mentioned by ClearBridge Investments in their first-quarter 2022 investor letter. Here is what the firm said:
“Facebook shares derated following fourth-quarter earnings results and first-quarter revenue guidance that was weaker than expected. We knew going into Facebook’s latest reporting period that Apple’s (NASDAQ:AAPL) iOS14 privacy changes (measurement, loss of signal) would have a near-term impact on earnings, but competition in the social media space (primarily from TikTok) further catalyzed multiple compression in the stock. While TikTok is a competitive threat and Apple’s privacy changes have impacted the industry, we believe these risks are manageable and Facebook retains a number of advantages around user scale, advertiser scale, new product development and sophistication of its digital advertising technology that are not being valued at current levels.”
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