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3 Stocks to Watch Amid Growing Usage of Extended Reality Tech

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The usage of various extended reality (“XR”) technologies like virtual reality (“VR”), augmented reality (“AR”) and mixed reality (“MR”) have been increasing over the years as they provide an immersive experience to users. With the help of XR technology, users can perform tasks like training employees, taking virtual tours, and so on.

Both VR and AR are becoming increasingly popular in gaming. VR offers gamers the ability to interact closely with the simulated gaming environment and utilize motion control to perform actions. AR, on the other hand, overlays objects in the real world. Mobile games like Pokemon Go or Harry Potter: Wizards Unite use AR to enhance the gameplay experience. Gamers can interact with virtual objects being overlaid in the real world and take the game forward.

XR technologies are also making gradual in-roads in becoming an effective training method. With the help of AR, VR, and MR, companies are providing employees a virtual experience of tasks they are about to undertake, thereby offering a more practical approach rather than depending on theories. These technologies are also a safer way of training in case of high-risk jobs. Simulated virtual environments can be created to help the trainees understand what they would have to do in case such a circumstance arose in reality.

Employees are also being trained remotely with the help of XR technologies in the present pandemic-induced work-from-home scenario. Employees are also being able to collaborate and communicate with their colleagues more effectively with VR.

In the retail space, AR and VR are being used to enhance customer engagement. With AR, customers can check out a piece of furniture they want to purchase and see how it fits inside their home. They can also undertake virtual trials of clothing or accessories. Retailers are also providing virtual tours of their physical stores. VR, in particular, is being used in tourism as it gives potential travelers a peek into what it would be like to visit the destination in reality. The outbreak of the pandemic last year aided in accelerating demand for VR tourism, which became a preferred alternative to actual travel.

Reflective of the positive developments that the various XR techs are experiencing, it is not surprising that the XR market is expected to grow going forward. According to a report by Mordor Intelligence, the XR market is estimated to witness a CAGR of 62.67% from 2021 to 2026.

3 Stocks to Watch Out For

The popularity of XR techs is poised to grow going forward owing to the myriad conveniences they are offering to users, including an enhanced gaming experience, training programs, and so on. This seems then a good time to look at stocks that stand to benefit from this potential. We have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft Corporation (MSFT - Free Report) offers its HoloLens MR headset which can be used for various training and collaboration purposes. The U.S. Army recently awarded a contract to Microsoft for developing MR headsets based on HoloLens technology, and using their Integrated Visual Augmentation System for soldiers to train and fight more effectively.

Shares of this Zacks Rank #2 company have risen 28.8% year to date. The Zacks Consensus Estimate for its current-year earnings increased 3.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 7.9%.

Facebook, Inc. (FB - Free Report) is offering a VR gaming world, namely, Facebook Horizon which is currently in an invite-only beta stage and it also owns Oculus, a VR headset company. On Sep 16, 2020, Facebook also unveiled Project Aria, a project that will help in creating wearable AR devices.

Shares of Facebook have risen 31.4% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 4.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 38.3%.

Alphabet Inc.’s (GOOGL - Free Report) Google has several AR and VR offerings. Google Maps uses Live View for navigational purposes as it overlays virtual directions on top of the real world. AR is also being used on Google Search to place 3D digital objects in the user’s space while its Cardboard app provides VR experience on smartphones.

Shares of Alphabet have risen 54.2% year to date. The Zacks Consensus Estimate for its current-year earnings increased 10.4% over the past 60 days. The expected earnings growth rate for the current year is 70.7%. Alphabet currently carries a Zacks Rank #3.

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