March 7, 2016
VIRTUAL REALITY MARCHES CLOSER TO MASS MARKET APPEAL
// NASDAQ
If Mark Zuckerberg is right, virtual reality will be everywhere in 10 years. Just like the smartphone.
Don’t let the artificial images fool you-virtual reality has real staying power. Two years after Facebook publicized its eyebrow-raising $2 billion acquisition of virtual reality startup Oculus VR, mounting interest from companies and slowly accelerating product rollouts show the technology intends to go mainstream. And Q1 2016 may prove to be a seminal period in the timeline of virtual reality’s ascension.
Back in mid-February, several reports said Alphabet (GOOG) may be working on a new virtual reality headset, moving beyond its smartphone-dependent Cardboard VR headset. Virtual reality also played a supporting role at last month’s Mobile World Congress; the technology’s growth is one of the driving forces behind the race to bring 5G mobile connectivity to the world.
Facebook CEO Mark Zuckerberg spoke about the future of virtual reality in an interview at the end of February , saying-among many things-the technology may reach mass market in 10 years and is poised to become the dominant form of technology-aided conversation in the future. Then, in addition to being Leap Day, February 29 marked the presale kickoff for HTC’s Vive , the latest entry into the virtual reality headset market (the Vive doesn’t ship until April).
On March 1, Microsoft (MSFT), which is dabbling in augmented reality with its HoloLens headset , revealed that its ever-popular Minecraft game will be available on the Oculus Rift headset (the Oculus Rift ships at the end of the month). Two days later, Samsung, which launched its free Gear VR headset giveaway (with Galaxy S7 phone pre-orders) in February, announced a partnership with Six Flags Entertainment (SIX) that will add the virtual reality experience to roller coasters at nine Six Flags amusement parks.
That same day, Deutsche Bank analysts released a note on virtual reality , stating the technology’s current ecosystem-extent of adoption among consumers-mirrors the early smartphone ecosystem of 2007. The analysts expect virtual reality to take longer to reach 100 million users (smartphones accomplished that feat in four to five years), but they believe demand will be strong enough to eventually reach that milestone. There will be hurdles, though; the report cites product development outpacing content development over the next two years as a potential turnoff, as consumers aren’t likely to be impressed by the limited options.
Below is a list of five stocks currently involved with virtual reality.
1. Advanced Micro Devices Inc. ( AMD , Earnings , Analysts , Financials ): Operates as a semiconductor company in the United States, Japan, China, and Europe. Market cap at $1.95B, most recent closing price at $2.46.
The company’s Radeon graphics cards work with virtual reality headsets.
2. Facebook Inc. ( FB , Earnings , Analysts , Financials ): Operates as a social networking company worldwide. Market cap at $310.08B, most recent closing price at $109.58.
3. Alphabet Inc. ( GOOG , Earnings , Analysts , Financials ): Operates as a holding company that provides global advertising services through division and pursues investments and projects through other divisions. Market cap at $487.96B, most recent closing price at $712.42.
4. QUALCOMM Incorporated ( QCOM , Earnings , Analysts , Financials ): Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. Market cap at $78.32B, most recent closing price at $52.38.
The company’s Snapdragon 820 processor is suited for mobile virtual reality.
5. Sony Corporation ( SNE , Earnings , Analysts , Financials ): Designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. Market cap at $29.12B, most recent closing price at $22.11.
The company’s PlayStation VR platform is expected to launch this year.
(Monthly return data sourced from Zacks Investment Research. All other data sourced from FINVIZ.)
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