Augmented Reality: NVIDIA on the Fast Track

The technology of Augmented Reality (AR) enhances our perception of the real world by overlaying digital elements. Practical applications of this technology can be found in industries such as education, manufacturing, and healthcare. Despite its potential and growth prospects, the sector seems to have lost favor with investors. This year, only around $464 million has been invested in AR, VR, and Metaverse startups from the seed to growth stage. This suggests that 2024 is on track to have the lowest funding volume in recent years. Notable investments include Rokid, a manufacturer of AR glasses, which raised $70 million in January, and Beijing-based Xreal with $60 million in funding. Google has recently partnered with the AR startup Magic Leap, potentially re-entering the AR and VR market that the company had largely left to competitors. A decade ago, Google was a pioneer in AR, but design and privacy concerns led to setbacks. The global AR market, which was valued at $32.1 billion in 2022, is expected to grow to $432.35 billion by 2031, according to SkyQuest. A large part of this growth will be driven by mobile AR, supported by the widespread use of smartphones and tablets. A notable example of mobile AR is the 2016 video game Pokémon GO. Collaborations between key market players and 5G providers to resolve latency issues are expected to further boost growth. Our analysis, based on hedge fund data from Insider Monkey, identifies NVIDIA Corporation as a leading player in the AR field. NVIDIA’s Cloud RX enables AR and VR experiences over 5G and Wi-Fi and integrates AR technology into vehicles. Citi confirms a "Buy" rating with a price target of $150 for NVIDIA after the company announced a new service to enhance generative AI capabilities for enterprises. NVIDIA reported impressive revenues of $26.0 billion for the first quarter of 2025, a 262% increase year-over-year. Non-GAAP earnings per share were $6.12, up 461% compared to the previous year. The Data Center segment was particularly strong, with record revenues of $22.6 billion, a 23% increase from the previous quarter and a 427% increase year-over-year. In the second half of the year, 179 out of 912 hedge funds held investments in NVIDIA. Rajiv Jain's GQG Partners was one of the largest shareholders with an investment of $9.34 billion. Poland Focus Growth Strategy estimates that AI stocks may offer higher return potential than NVIDIA. Despite this view, NVIDIA ranks fourth on their list of the best AR stocks.