Investing in augmented reality stocks
This accessible and popular tech may be vulnerable to privacy regulations.
Augmented reality is becoming an increasingly popular integration for mobile games and apps, but has to compete with similar technologies like virtual reality. Here’s what Australian investors should consider before investing in augmented reality stocks.
What are augmented reality stocks?
Augmented reality stocks are stocks from companies that design or produce augmented reality (AR) hardware or software — including chipsets, 3D sensors, headsets, haptic technology, laser projections, varifocal displays and semiconductors.
What is augmented reality?
AR is a form of technology that superimposes sounds and images onto what we observe. In this way, augmented reality tweaks our experience of the world around us by adding to what we perceive. The technology typically requires a lens-equipped screen to operate — like the camera on your mobile device — but can also rely on laser projections.
Since augmented reality is a screen-dependent technology, we typically experience AR through a mobile device. Today, a number of mobile games make use of AR technology, including Pokemon Go, Ingress and Harry Potter: Wizards Unite. But the technology can be used in a variety of other ways, too — including AR projections to assist complex neurosurgeries and projections on fighter planes to assist pilots with speed and navigation.
Augmented reality vs. virtual reality
While sometimes used interchangeably, augmented reality and virtual reality are two different sets of technologies. While augmented reality adds to the observable environment, virtual reality aims to replace it entirely.
Virtual reality (VR) is a computer-simulated experience that allows users to interact with a simulated 3D environment. To access this technology, you often need some form of wearable technology, like a VR headset or head-mounted display. Today, virtual reality is being used in video games, training simulators, real-estate tours, online retail, architectural design and more.
Why invest in augmented reality stocks?
Augmented reality is an emerging technology that is chock-full of potential. And market projections are promising.
According to Mordor Intelligence, the global AR market was worth $US 882 million in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 55.8% from 2020 to 2025. During this time, over 800 million smartphones will be equipped with AR-supporting technology. And other market sectors, like the automotive industry, are also integrating the technology into new models with heads-up displays and AR co-drivers.
Augmented reality is a flexible and adaptive technology with a myriad of practical, real-world applications. Not only do investors in Australia have the opportunity to back progressive new technology — they have the opportunity to invest in something they may actually use, both now and in the future.
Risks of investing in augmented reality
Augmented reality is a technology on an upward trajectory, but there are investment risks to consider — namely: data protection regulations and market competitors.
Tech companies have come under public scrutiny in the past for infringing on data privacy rights. AR technology is particularly reliant on consumer locations and cameras to operate. Enhanced data protection regulations could impact the industry’s process and hamper growth.
Another consideration is market competitors. Potential is no guarantee of growth and close competitors in the virtual reality and mixed reality markets may take aim at AR companies by targeting the same consumer base.
Augmented reality stocks
Augmented reality is a complex technology with many moving parts, including chipsets, sensors, headsets, and varifocal displays. While there are few pure-play augmented reality stocks — companies that focus on augmented reality and nothing else — you can add AR technology to your portfolio by investing in companies that contribute to the technology.
What ETFs track the augmented reality category?
Most of the ETFs that offer exposure to augmented reality stocks are heavily weighted with software and robotics companies.
- BetaShares Asia Technology Tigers ETF (ASIA)
- BetaShares S&P/ASX Australian Technology ETF (ATEC)
- ETFS Morningstar Global Technology ETF (TECH)
Compare trading platforms
To invest in augmented reality stocks, you’ll need a brokerage account in Australia. Review your platform options below.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Bottom line
Augmented reality is a growing technology many of us can access through our mobile devices — but it isn’t without its risks. Data protection regulations and pressure from competing technologies may pose threats to this industry’s development.
Explore your brokerage account options across multiple platforms to find the account that best meets your needs.
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