We recently published a list of 11 Best Augmented Reality Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Roblox Corporation (NYSE:RBLX) stands against other best augmented reality stocks to buy according to hedge funds.
According to a report by Mordor Intelligence, the global AR market is anticipated to grow at a notable compound annual growth rate (CAGR) of 42.36% between 2024 and 2029, reaching $248.38 billion by the end of the forecast period. It currently has a market size of $42.48 billion as of 2024. While the largest market for the industry is North America, the Asia Pacific region is anticipated to be the fastest growing.
The report also highlighted that a significant portion of this market is mobile AR, which leverages the globally spread use of smartphones, tablets, and other smart devices. Some estimates show that nearly 1.7 billion devices can support mobile AR as of 2024. Therefore, the massive and globally spread smartphone user base gives the AR industry a key competitive advantage.
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Trends in the Augmented Reality Space
The Immersive Entertainment—Global Strategic Business Report 2024 showed that the global market for Immersive Entertainment was $133.6 billion in 2024. It is expected to grow at a compound annual growth rate of 23.5% between 2024 and 2030, reaching $473.9 billion at the end of the forecast period. Thus, the global AR market is also likely to benefit from the expansion of the immersive entertainment industry.
The AR market is yet to reach the apex of its potential, and experts estimate that it will do so in about a decade. Many technological advancements in the industry support this growth, as tech giants have been scrambling to attain the AR and mixed reality dream for years. Investments worth billions of dollars have been directed to the cause. According to SkyQuest, the largest investment is being poured into training and industrial maintenance, with figures reaching as much as $4.1 billion in the field of AR. Apart from this, private firms, VCs, and even some governments are financing AR research institutes and teams.
The augmented reality industry has a primary user base comprising healthcare, aerospace and defense, consumer, and retail. In addition, the technology is being increasingly used in the automotive industry. Since autonomous vehicles are becoming a rising trend across the globe, the integration of AR in these vehicles is supporting the broader AR industry. AR technology helps improve the driver and the autonomous system’s comprehension of their environment by overlaying digital data in the real world. In addition to several other features, consumers can interact with virtual 3D models of vehicles with the help of AR technology in showrooms, allowing them to visualize several customizations.
Another key growth driver for the industry is the use of AR in hospitals and medical startups. The healthcare sector continuously uses immersive modalities to streamline its processes, as surgeons are increasingly leveraging AR to deal with the potential risks of healthcare procedures. AR is helping healthcare professionals reduce the rate of errors and the number of potentially unsafe surgeries. According to SkyQuest, the AR segment in the healthcare industry was expected to reach $1.2 billion by 2024.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 25 stocks operating in the AR space and chose the top 11 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment. Our focus was on companies producing AR-related hardware, software, or technologies used to develop augmented reality products. However, we also included companies that offer services essential to the AR industry, like semiconductor chips.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A person taking lessons through Roblox Education, expanding their knowledge and skills.
Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 61
Roblox Corporation’s (NYSE:RBLX) platform comprises Roblox Client, Roblox Studio, and Roblox Cloud. Roblox Studio is an app that allows users to explore digital 3D worlds, while Roblox Studio is a toolset used by creators and developers to publish, build, and operate 3D experiences and other content. Roblox Cloud encompasses the infrastructure and services powering human co-experience platforms.
The company ranks tenth on our list of the best AR stocks to invest in because of its several offerings in the sector. For instance, it collaborated with New York’s Metropolitan Museum of Art to launch Replica, a hybrid experience that allows visitors to scan and “capture” actual artworks from the museum’s collection, allowing their avatars in the game to wear the digital recreations. In addition, Roblox Corporation’s (NYSE:RBLX) users can also visit a virtual recreation of the museum in the game. This includes the Met’s popular façade on Fifth Avenue and the Great Hall’s sprawling staircase.
In addition, Roblox Corporation (NYSE:RBLX) collaborated with Walmart to sell physical goods directly to users inside the game in a unique AR experience. The company also launched the Walmart Discovered AR Experience, the first-ever immersive AR experience that lets customers visit Walmart Discovered in the real world.
Citi analyst Jason Bazinet maintained their bullish stance on Roblox Corporation (NYSE:RBLX), giving it a Buy rating on April 21. The analyst based his rating on the potential positive catalysts for the stock. He said the upcoming Q1 2025 earnings release could surpass market expectations and company guidance, supported by favorable third-party data trends. The analyst also highlighted the anticipated share price return of 25.5%, suggesting a notable upside potential for investors.
Overall, RBLX ranks 10th on our list of best augmented reality stocks to buy according to hedge funds. While we acknowledge the potential for RBLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than RBLX but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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