We recently published a list of the 12 Best Virtual Reality Stocks to Buy According to Analysts. In this article, we are going to take a look at where Unity Software, Inc. (NYSE:U) stands against the other best virtual reality stocks to buy according to analysts.

Overview of the Global VR Industry

Virtual Reality (VR) creates a 3D artificial environment in the real world through VR technology gadgets such as headsets, gloves, glasses, and bodysuits. According to Grand View Research, the global VR market had a market size of $59.96 billion in 2022. The industry is expected to grow at a compound annual growth rate of 27.5% between 2023 and 2030.

The VR industry has metamorphosed the entertainment and gaming sector by allowing users to engage in a simulated environment. In addition to its popularity in these sectors, another significant factor behind its anticipated growth is its use in instructional training, such as for engineers, pilots, field workers, defense personnel, mechanics, and technicians working in various industrial sectors. In addition, VR is also used in industries like healthcare and automotive due to its significant operational benefits.

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VR in Gaming

VR in gaming refers to a simulated, immersive experience that manufactures an interactive 3D environment, allowing users to feel as if they are physically present in the simulated reality. This reality is generally administered through a headset that traces head movements and displays images to create a feeling of immersion. The technology also employs additional factors, such as treadmills or motion controllers, to augment the realistic and interactive mode of the experience.

According to Fortune Business Insights, the global Virtual Reality (VR) market in gaming was valued at around $17.96 billion in 2023. It is anticipated to grow at a significant compound annual growth rate of 30.4% between 2024 and 2032, going from $22.63 billion to $189.17 billion between the forecast period. North America is anticipated to be the largest market dominating the global industry, holding a share of 37.42% in 2023.

VR in gaming is increasing in popularity across the globe, with major technology companies making significant investments in developing innovative and advanced VR software and hardware. This trend is making the technology more accessible to a broader consumer base.

VR in Healthcare

According to Fortune Business Insights, the global VR in the healthcare market had a share of $3.12 billion in 2023. It is anticipated to grow at a compound annual growth rate of 35.1% between 2024 and 2032, going from $4.18 billion to $46.37 billion over the forecast period. VR in healthcare is gaining significant traction due to its immense benefits for the industry. The technology employs computer-developed mechanisms to deliver medical training to healthcare professionals and allows efficient healthcare treatments in immersive environments.

Medical professionals attain interactive, simulation-driven training, providing more efficient treatment strategies and accurate diagnoses. The technology also helps medical marketing and creates significant scope for income generation through enriched patient experiences. In addition, several major VR providers in healthcare solutions are integrating 360-degree video features and interactive 3D content to develop effective learning programs for healthcare students and professionals.

Our Methodology

We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 virtual reality stocks. We then selected the top 12 with the highest analyst upside potential as of March 3, 2025. We also added the number of hedge fund holders for each stock as of fiscal Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of analyst upside potential as of March 7, 2025.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Unity Software, Inc. (NYSE:U)

Analyst Upside: 29.53%

Number of Hedge Fund Holders: 48

Unity Software, Inc. (NYSE:U) provides a platform to create interactive experiences and games. The company holds a significant spot in the VR industry as more than 60% of the top-grossing VR Steam experiences in 2023 were made with its offerings. It offers a range of software solutions to run, create, and monetize real-time 2D and 3D content for PCs, mobile phones, tablets, and VR/AR devices. Its tools and services ecosystem allows users to develop seamless VR experiences. More than 50% of week one Must Play Apple Arcade Games for Vision Pro as well as 2 out of 3 of the most popular Quest experiences were made with Unity. Similarly, over 70% of top-selling Quest games are made with Unity. Back in 2023, Unity’s stock soared after Apple announced that Unity’s gaming software would be used in Apple Vision Pro.

The company’s fiscal Q4 2024 results reflected progress, with Unity Software, Inc. (NYSE:U) meaningfully executing its guidance for both revenues and adjusted EBITDA. Revenue in its strategic portfolio rose at its fastest rate in four quarters, and adjusted EBITDA beat the top end of its guidance by 26%.

Unity Software, Inc. (NYSE:U) recently announced plans to migrate its Unity ad network to its new AI platform, Unity Vector. Vector is designed to leverage data from across the Unity ecosystem, integrating self-learning AI models to provide deeper insights, optimize performance, and deliver better results for its customers. The company plans to begin the migration towards the end of fiscal Q1 2025 and finish its first phase by the end of fiscal Q2 2025.

Overall, U ranks 7th on our list of the best virtual reality stocks to buy according to analysts. While we acknowledge the potential of U as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than U but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.