Augmented Reality (AR) and Virtual Reality (VR) are likely to become mainstream technologies in 2018. These transformative technologies have applications in various industries like entertainment, education, healthcare and business.
Market research firm, IDC projects global spending on AR/VR to see a 5-year CAGR of 71.6% between 2017 and 2022. Moreover, spending on AR/VR products and services is expected to reach $27 billion in 2018.
Further, IDC forecasts the overall AR and VR headset market to grow 6% year over year to 8.9 million units in 2018. The unit growth is expected to finally reach 65.9 million units by 2022.
AR Becoming Dominant Technology
Although both AR and VR have advanced at a scintillating pace in recent years, it seems that AR is gaining an upper hand due to its easy to use mechanism.
Since AR overlays digital information on images around the real-world environment, a smartphone is the only gear needed to embrace it. Whereas VR, which immerses you in digital environment, needs consumer friendly hardware to enable the technology.
AR is promulgating at a rapid pace and is expected to have 1 billion users by 2023. Digi-Capital forecasts AR to reach $85 billion to $90 billion revenue and VR $10 billion to $15 billion revenue by 2022.
Moreover, worldwide shipment of smart AR glasses is forecasted to reach around 5.4 million units by 2020.
Per data from MarketsAndMarkets research firm, AR market (including hardware, device type and application) is expected to grow at a CAGR of 55.71% between 2017 and 2023. The market will be worth $61.39 billion by 2023.
AR Use Cases Expanding Fast
AR gained huge prominence with the success of Nintendo’s Pokemon Go. It’s well-known that gaming and entertainment are two industries that have strong demand for AR application. However, AR use case is now fast expanding into industries like retail, banking, manufacturing, education and healthcare.
AR applications have already gained huge popularity in retail and home furnishing with companies like Ikea and Target adopting the technology to help customers visualize what their furniture may look like at home.
Further, e-commerce giant Amazon launched AR View, which enabled customers visualize online products in their living space, via their smartphone cameras.
Per 3rockAR, AR is gaining adoption in healthcare for various applications like “surgical pre-operation assessment, medical simulation, minimally invasive surgery and rehabilitation.” Adoption of AR can significantly improve quality of treatment patients receive from healthcare providers.
Meanwhile, financial institutions are using AR-enabled data visualization to gain fast insights into complex datasets, which is enabling them to make decisions quickly. Per VentureBeat, banking major Wells Fargo’s AR application now allows consumers to interact with tellers in a virtual space.
Moreover, Amazon is transforming into a major threat to the wealth management industry based on its Sumerian virtual reality (VR) and augmented reality (AR) platform.
4 Tech Stocks in Focus
Here we present four tech stocks that are well-poised to gain from AR’s increasing dominance.
Microsoft MSFT: This Zacks Rank #1 (Strong Buy) company is actually credited with coining the term Mixed Reality (MR), which stands for the combination of AR and VR. You can see the complete list of today’s Zacks #1 Rank stocks here.
Microsoft’s HoloLens offers MR technology and has gained significant adoption among developers. Per The Verge, the company is planning to showcase HoloLens 2 headset later this year. The lighter device is anticipated to include latest Kinect sensor and will be supported by a customized AI chip.
Microsoft is also expected to lower HoloLens 2 price (currently $3000) in order to attract more customers.
Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus | Microsoft Corporation Quote
Apple AAPL: This Zacks Rank #2 (Buy) stock is definitely the frontrunner in the AR market, courtesy of its ARKit platform and plethora of acquisitions. At its last WWDC, the iPhone maker unveiled ARKit 2 with enhanced features like multiplayer for AR. The feature will allow two or more people to log in an app and see the same AR objects in the same shared space.
Apple has also been speculated to foray into the wearable AR glasses space. Reportedly, it partnered with renowned lens maker Carl Zeiss in this regard. The company’s latest acquisition of Akonia Holographics, a manufacturer of lenses for AR glasses, strengthens this belief.
Alphabet GOOGL: This Zacks Rank #3 (Hold) company is giving tough competition to Apple in the AR market.
Similar to ARKit, Google’s ARCore lets developers create AR experiences for Android platform. ARCore uses motion tracking, environmental understanding and light estimation to integrate virtual content with the real world.
Moreover, Google AR Expeditions app has 800 VR and 100 AR experiences. The project initially aimed at students to provide them with augmented learning experiences.
Snap SNAP: Another Zacks Rank #3 stock, Snap has been a prominent face in the AR market for some time.
Snap’s filters allow users to experiment with their appearances. Snappables allow users to share lenses and play games with each other in AR, while 3D Bitmoji can be used to project a Bitmoji of you on to the real world.
In April, Snap launched ShoppableAR lens on its messaging application, Snapchat, which enables advertisers sell products directly through the filters.
Shoppable Lenses, which is much like the app’s Sponsored Lenses launched in 2015, has an additional button, which when tapped will allow users to visit a website, buy a product, watch videos or install an app.
(NOTE: We are reissuing this article to correct a mistake. The original article, issued earlier today, August 31, 2018, should no longer be relied upon.)
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