The 9 Biggest Virtual Reality Stocks

The 9 Biggest Virtual Reality Stocks

Posted On January 27, 2020 4:10 am

Virtual reality (VR) was once thought to be something of a technological holy grail — the type of tech that science-fiction plots revolved around and a subject that futurists and gadget enthusiasts opined about to great end. There’s still excitement surrounding the immersive worlds made possible by head-mounted displays, but that “holy grail” status has lessened to a degree as the dream has moved closer to reality.

Highly immersive consumer VR headsets hit the market in 2016, but high prices and a lack of must-have exclusive content meant that adoption for the new display medium has lagged behind the levels that many analysts anticipated. Head-mounted display development initiatives have also splintered somewhat, with augmented reality (AR) emerging as an alternative that’s less immersive, but more connected to the real world — and one that many market watchers and technology leaders view as having greater potential than virtual reality.

Still, the VR market has huge potential, and virtual-reality headsets continue to offer better price-to-performance dynamics and an expanding range of compatible apps and content. High-profile, exclusive video games are heading to VR, people are using panoramic cameras to create videos and photos for the format, and movie companies and platforms are providing ways to watch their content with headsets. And it’s not just video games and other forms of entertainment where the new display medium has big potential. VR could eventually bring about world-changing applications in fields like healthcare, manufacturing, and education.

The nine biggest stocks in virtual reality

The table below breaks down the nine biggest publicly traded companies with stocks that can be purchased on U.S. exchanges or through over-the-counter trading by market capitalization that have significant exposure to the virtual reality space:

Company Market Capitalization Main Areas of VR Business
Microsoft (NASDAQ:MSFT) $1.2 trillion Headsets, platform software, video games, cloud services
Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) $923.76 billion Headsets, streaming video
Amazon (NASDAQ:AMZN) $916.15 billion Streaming video, cloud services, e-commerce
Facebook (NASDAQ:FB) $585.32 billion Headsets, social media, video games
Alibaba Holdings (NYSE:BABA) $569.01 billion E-commerce
Tencent Holdings (OTC:TCEHY) $458.6 billion Social media, video games
Intel (NASDAQ:INTC) $260.35 billion Semiconductors, 360-degree camera technology
Qualcomm (NASDAQ:QCOM) $100.74 billion Semiconductors, headsets
Sony (NYSE:SNE) $83.44 billion Headsets, video games


1. Microsoft

Microsoft has thrived under the leadership of CEO Satya Nadella, who came on board in the chief-executive role in 2014 and ushered in a subscription-focused model for many of the company’s software products and focused on the growth of its Azure cloud-services business. Successes on those fronts have made the software giant one of the best-performing mega-cap stocks of the last decade. Microsoft’s impressive turnaround made it the largest company in the world at the end of 2019 — and also the largest company with exposure to the VR space.

Virtual reality and augmented reality remain a small portion of the company’s business, but Microsoft has ways to benefit if these new, wearable display formats take off. The Windows 10 operating system allows compatible PCs and laptops to access Windows Mixed Reality — a platform for running VR and AR experiences.Microsoft also partnered with companies including Samsung, HP, Asus, and Dell to build headsets that run on the platform. While the company hasn’t manufactured its own virtual reality headset, it is responsible for the HoloLens augemented reality headsets.

Comments from Phil Spencer, the head of Microsoft’s Xbox gaming division, suggest that the company isn’t seeing much demand from its video game console user base for virtual reality and won’t make VR a big part of its next-generation system. However, Microsoft does have some exposure to virtual reality video game software — as its Minecraft video game has been one of the most popular early titles for VR devices and the company has made some smaller games and experiences for Windows Mixed Reality.Microsoft’s Mixer social media platform for streaming video game footage could also wind up seeing increased virtual-reality integration if the display format gains traction.

If virtual reality and augmented reality take off, it will also likely create increased demand for related cloud-infrastructure services — which could be a significant positive catalyst for Microsoft’s Azure business. Azure is one of the leading cloud services platforms, and server-side computing could help reduce the hardware requirements needed to create VR and AR experiences and process data generated from devices and software applications.

2. Alphabet

Alphabet’s Google division dominates the search engine and digital advertising markets, and these strengths have made it one of the biggest success stories of the Internet Age. Like Microsoft, VR remains a very small component of Alphabet’s overall business strategy, but the search leader has been an early mover in the space and has some big platform advantages that make it a company to watch in the world of virtual reality.

Alphabet made its first push into the consumer VR space in 2014 with Google Cardboard — a headset fashioned from cardboard that could be cut out and sized to attach to a user’s mobile phone screen. The low barrier to entry allowed Google Cardboard to achieve relatively high levels of adoption and put basic VR experiences into the hands of millions of mobile users.

The company then launched the Daydream View in 2016 — a headset that allowed users to connect a Google Pixel phone or select phones from Samsung, Asus, LG, and Motorola to use as a screen for mobile VR experiences. Alphabet followed this up with the Google Daydream in 2018 — a stand-alone VR headset with a built-in screen that was part of Lenovo‘s Mirage Solo hardware line and used Google’s VR platform.

Phone-based virtual reality initially enjoyed a significant adoption advantage in the U.S. market compared to headsets that featured built in screens, but this design approach has lost favor because dedicated VR headsets tend to offer superior capabilities. Google disabled support for the Daydream View headset with the introduction of its Pixel 4 phones, and many virtual-reality experts now believe that the days of the phone-powered VR experience is over.

It looks like the company is moving away from making phone-based VR hardware, but Alphabet doesn’t need to be a big player in the headset space in order to benefit from the growth VR. The wide reach of Google’s Android mobile operating system, its G Suite online software, and media platforms give it other avenues to benefit.

As the biggest platform for online-video streaming, Google’s YouTube could become a huge a hub for VR content. YouTube already has a virtual reality app for experiencing content built around the display medium, but there’s still plenty of untapped potential. Alphabet’s push into the gaming industry with its streaming-based Stadia platform could also give it a position in the VR video game market — although issues with latency that have been a trouble for streaming gaming platforms will have to improve before optimal functionality can be achieved.

3. Amazon

Amazon’s leadership positions in e-commerce and cloud computing have made it a giant in the tech space. The Jeff Bezos-led enterprise has also built positions in voice-operated smart speakers and streaming entertainment, and its vast resources and willingness to take substantial in order to deliver game-changing innovations suggest it will continue to be one of the world’s most influential companies for decades to come. With a wide footprint across the tech sector, Amazon has a range of ways to benefit if the VR market heats up.

The company has been experimenting with integrating virtual reality into its e-commerce platform. The company has developed limited-release kiosks that involve users navigating video game like shopping malls in a virtual-reality world and browsing highlighted items for its Prime Day shopping holiday.

Amazon has yet to release any virtual reality shopping apps, but it has released an AR app for its e-commerce platform. This offering hasn’t caught on in a big way, but the company will likely be the biggest beneficiary if AR and VR usage for online retail gains ground in the Western market.

Amazon Prime users can’t shop in virtual reality yet, but the Prime Video streaming service has a VR mode that puts users in a simulated theater and allows them to watch titles from its library.And while there haven’t been any big entertainment releases for the display format from the company, Amazon has reportedly interested in developing its own VR content.

The e-commerce and cloud-computing leader also owns the Twitch social media platform for streaming video game footage, and viewers can watch their favorite broadcasters stream VR titles or set up their own streaming broadcasts. The company is also rumored to be launching its own streaming-based game platform sometime in the not-too-distant future, and it’s possible that VR functionality could be supported.

Amazon’s cloud-computing platform could play an important role in pushing VR forward. Some developers are hoping that some of the intensive computing processes needed to create high-quality virtual reality can be offloaded to the cloud so that these experiences can be accessible on less-powerful computers or mobile devices. Amazon Web Services (AWS) already provides tools to aid in the creation of VR applications.

The company launched Amazon Sumerian in 2018 — a development suite for making VR and AR apps that can run in web browsers. Sumerian is part of the AWS Management Console and was designed with a range of industrial and creative applications in mind, and its features could be a draw to the company’s cloud services for developers looking to build cloud-distributed virtual reality and augmented reality experiences.

4. Facebook

Like Alphabet, Facebook has leveraged technology strengths and massive reach for its software to establish a leading position in the digital-advertising market and change how the world connects. The social media company has a global active user base of more than two-billion people across its platforms, and it’s been looking to expand its digital empire in new directions. Virtual reality has been one of the company’s biggest growth-and-innovation plays outside of its core social media business.

Facebook acquired VR-company Oculus in 2014 at a price reported to be in the $3 billion range. Oculus remains one of the top headset brands, and its offerings have continued to improve and evolve in new directions since the release of the unit’s first consumer headset. The initial Oculus Rift headset debuted in 2016. It was then discontinued in 2019 after the launch of the Rift S hardware, which offers superior image resolution, headset tracking, and other upgrades.

The company also launched the Oculus Go (a VR headset that doesn’t need to be tethered to a computer) in 2018, and followed it up with the Oculus Quest (an updated non-tethered headset) in 2019. According to research by TrendForce, Oculus had a roughly 19.4% share of all virtual reality headsets shipped in 2018 and a 28.3% share of all VR headsets shipped in 2019.

CEO mark Zuckerberg has been very bullish on the future of VR, even going so far as to say that it could emerge as the next revolutionary computing platform. He’s also admitted that the company’s ambitions in the space have taken longer to come to fruition than initially anticipated, but it seems clear that Facebook remains committed to building a future in virtual reality.

Oculus headsets now share data directly with Facebook, and the company is incorporating this information into its digital advertising platform and using it to shape the development of new applications for virtual reality. It’s also snatching up leading virtual-reality developers.

Facebook purchased Beat Games (the developer behind the popular VR game Beat Saber) at the end of 2019, and comments from the press release announcing the acquisition suggested that more big VR moves are on the way. Facebook is also developing new VR games and experiences internally, and the company is likely to remain one of the most influential players in the virtual reality market for years to come.

5. Alibaba Holdings

Alibaba is China’s top e-commerce player and one of its largest technology companies. The e-commerce leader operates two main online retail platforms — one for consumers to sell goods to each other and one for consumers buy goods from larger businesses. With this focus, it shouldn’t come as much of a surprise that Alibaba is often referred to as “the Amazon of China,” and the company has shown interest in building VR and AR use on its platforms.

China is not only the world’s biggest online retail market, it’s also the world’s biggest virtual reality market in terms of user count.Headsets tend to be significantly cheaper in the country, and that has helped to spur adoption — even if most of the hardware sold is phone-based and doesn’t measure up to the quality and functionality of Facebook’s Oculus products or HTC’s Vive headsets. Still, the combination of the world’s biggest VR installed base and the world’s biggest e-commerce market (it accounts for over 50% of overall spending) means that China is the market where virtual-reality-based shopping is most likely to take off, and Alibaba is a resource-rich first mover in the space.

Alibaba launched its first VR shopping experience, Buy+, in 2016. Buy+ allows users to navigate a virtual mall and then select and purchase items. The company then expanded the app to support AR, and it continued to…

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