As for growth and inflation, Goldman Sachs forecasts that the U.S. GDP will grow by 1.8% from Q4 2023 to Q4 2024 and by 2.1% for the whole year. Once core personal consumption expenditures (PCE) inflation goes below 2.5%, Goldman Sachs believes prices will drop dramatically.
Apart from these macroeconomic projections, by 2025, the world VR market is expected to be worth more than $22 billion, up from less than $12 billion in 2022, giving an added impetus to the trio we will explore.
Despite its long history as a tech giant, Microsoft’s broad business strategy makes virtual reality stable. Because of short-term sales predictions, the stock is cheap, making it a good option.
Meta’s strong interest in virtual reality can be seen in the Meta Quest Pro, even though the company’s stock price has recently gone down because of low sales projections.
Unity offers fantastic gaming tools, and its forthcoming improvements will make VR programs simpler.
Let’s explore further!
Microsoft (MSFT)
Microsoft may seem odd among virtual reality stocks since it’s a legacy company. However, you should buy this stock because Microsoft’s diversification provide it an advantage over other VR stocks.
MSFT stock is down owing to lower-than-expected quarterly revenue expectations as its AI aspirations ratchet up. However, it provides an attractive entry point and a potential upside of over 17%.
Microsoft is already an important player in VR. Microsoft Mesh is a tool for sharing mixed-reality experiences across different devices. It gained massive attention during the pandemic and continues to hold interest as more work shifts online.
€‹Additionally, Microsoft has been keeping OpenXR Tools for Windows Mixed Reality up to date. Recent updates also improve motion reprojection techniques. These algorithms are very important for making virtual worlds smoother and more realistic.
Microsoft offers several resources for mixed reality (MR) developers. Developers may construct MR apps using tutorials, development kits and thorough documentation. MSFT also provides a video series for mixed reality novices that covers low-code/no-code platforms and sophisticated cloud services. €‹
Meta Platforms (META)
Meta Platforms is in much the same category as Microsoft. The reason for that is simple enough. Both these companies are legacy enterprises and Meta, with over 3 billion daily active users, possesses a huge consumer base to market its products.
Another thing that Meta Platforms and Microsoft have in common is that their stocks are both down because their guidance was not as good as expected. After Meta beat profit estimates for the first quarter, the company’s stock dropped 16%, the most in one day since October 2022, due primarily because of weak sales predictions.
That being said, the social media giant is still working hard on its VR plans. Case in point, Meta Quest Pro is high-end VR gear with advanced features like flat lenses, high-resolution cameras that face outward and inward-facing sensors to record feelings and track eye movement.
Reports say that Meta will release four new VR headsets by 2024. These will include Project Cambria and two cheaper ones called Stinson and Cardiff. Furthermore, Meta has lowered the prices of its Quest 2 models and tools to get more people to use VR technologies.
All of these initiatives illustrate Meta Platforms’ forward-thinking approach, which is further reflected by its 24% upside potential and ‘Strong Buy’ rating.
Unity Software (U)
Like with MSFT and META, Unity is suffering from similar themes. The game software company’s stock dropped by double digits after management issued tepid financial forecasts and unveiled its restructuring strategy.
However, experts say Unity Software has good promise, just like the other two virtual reality stocks on this list. Unity holds a “Moderate Buy” consensus rating, with an upside potential of 33%.
On VR developments, when Unity 6 game engine comes out in 2024, it will speed up VR and other real-time 3D apps. This update makes it faster to make shared games, works with WebGPUs right away and supports more XR devices.
Unity also now fully supports the brand new Meta Quest 3 headset. This makes it easy for developers to create mixed-reality apps that can be used on more than one device. In projects like making digital twins for businesses like aviation, Unity has been praised for the unique ways it uses VR and AR.
Unity is undoubtedly a company in transition. As it changes how much it spends, Unity thinks its adjusted EBITDA margin will go from 20% in 2023 to “over 25%” in 2024. If the company makes good on its promises, there is a substantial 33% upside on offer.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.
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