Virtual reality (VR) is not exactly a brand-new technology — certain kinds of gaming and developer headsets have been available since the mid-2010s. But it’s not quite mainstream, either. Most people aren’t replacing Zoom calls with VR conferences just yet.
That could change soon, due to two recent product launches in the last year: the Apple Vision Pro and the Meta Quest 3.
Neither product’s success is assured — and neither is particularly cheap. Apple’s Vision Pro starts at a price of $3,499, while Meta’s Quest 3 starts at a slightly more reasonable $499. But the two launches bring VR technology a couple of steps closer to widespread adoption — and they present an interesting opportunity to learn about virtual reality stocks.
» Learn how to buy Apple stock or how to buy Meta stock.
What are virtual reality stocks?
Virtual reality stocks — which are also sometimes called “metaverse stocks,” after the “metaverse” of cyberspace that exists within virtual reality — are shares of publicly-traded companies that serve the market for VR technology in some way.
Some make hardware, such as VR headsets or graphics processing units. Others make software, such as tools that allow artists to design works in VR. Still others are VR content creators, such as video game studios.
For the purposes of this article, we are also including companies involved with augmented reality (AR) technology, as AR has similar components to VR and is often being developed by the same companies.
The difference between VR and AR is whether or not you can see the outside world. VR typically refers to headset technologies that create fully-immersive experiences in virtual space, while AR refers to technologies that use special glasses or cameras to put virtual overlays on top of the real world.
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7 top virtual reality stocks by one-year performance
Below are the seven best-performing stocks in the Global X Metaverse Index, an index of virtual reality and augmented reality stocks that trade on major U.S. exchanges. The stocks are ordered by one-year performance.
Ticker | Company | Performance (Year) |
|---|---|---|
NVDA | NVIDIA Corp | 125.94% |
COIN | Coinbase Global Inc | 121.55% |
HUYA | HUYA Inc ADR | 79.40% |
META | Meta Platforms Inc | 73.14% |
TSM | Taiwan Semiconductor Manufacturing ADR | 73.12% |
MTTR | Matterport Inc | 63.98% |
RBLX | Roblox Corporation | 55.04% |
Source: Finviz. Data is current as of Sept. 3, 2024, and is intended for informational purposes only, not for trading purposes.
Pros and cons of virtual reality stocks
Like any investment, virtual reality stocks have a unique mix of upsides and downsides.
Pros of virtual reality stocks
Potentially-transformative technology. Being an early backer of a technology that goes on to change the world is a dream for many tech investors. There’s no guarantee that VR will have the same kind of economic impact that computers, the internet or smartphones did — but if it does, investors will want to be there for it. The popularity of social media apps that have AR features, such as Snapchat and TikTok, suggests widespread interest in the technology.
Blue-chip stocks with strong performance. Betting on an emerging technology often means making risky investments in small, new companies — but that's not the case for VR. Most of the companies on the list above are the kinds of large-cap tech stocks that have been carrying the return over the last year. They're not without risk, but they're considerably more stable than a typical startup.
Cons of virtual reality stocks
Potentially a fad. VR technology could go the way of the PC or the smartphone, but it could also go the way of NFTs. The VR industry has a history of booms and busts in which widespread adoption seemed to be just around the corner but never came. It’s too early to rule out that possibility with the new products from Meta and Apple.
Interest rate sensitivity. Many big tech stocks, including some of the ones in the table above, saw their share prices drop in 2022, as interest rates rose and made the companies’ substantial debt burdens more expensive to service. If inflation is more persistent than expected and the Federal Reserve keeps interest rates high for longer than anticipated, it could hit VR stocks hard.
How to buy virtual reality stocks
There are a few different ways to get exposure to virtual reality stocks — the right one for you will depend on your investment situation and objectives.
Individual virtual reality stocks
One approach is to buy shares of individual virtual reality companies. Some of the VR stocks in the table above are significantly beating the S&P 500’s long-term annual average return of 10% before inflation.
However, buying individual stocks — especially tech stocks — can be pricey if you’re not using a broker that offers fractional shares. Most of the companies in the table above have triple-digit share prices.
» View the best brokers for fractional shares
It’s important to research stocks before buying to make sure that initial purchase is worthwhile, as individual stocks can be riskier than an index like the S&P 500. This is especially true if you're planning on day trading.
Virtual reality ETFs
There are also exchange-traded funds (ETFs) dedicated to virtual reality stocks, such as the ProShares Metaverse ETF (VERS). It offers investors exposure to dozens of virtual reality stocks with a single purchase.
However, like individual stocks, ETFs come with risk, too, and it’s important to research their holdings before buying.
Virtual reality stocks and options trading
Some speculators may trade options on buzzy stocks such as VR stocks. That might mean buying call options or selling puts if you think the price of a VR stock will rise, or buying put options or selling covered calls if you think it will fall.
But these trades aren't always appropriate for beginner investors. Check out our options trading overview for more information.
» Check out some of the best ETFs in terms of performance
The author owned shares of Alphabet at the time of publication.
