The best augmented reality stocks: Amazon.com as the frontrunner

Augmented Reality (AR) is an emerging technology that enhances our perception of the real world by embedding digital elements through devices into the existing environment. From spatial computation to holographic projection, there are various approaches to describe AR. Its practical applications, such as the HoloLens holographic computer that allows users to interact with digital content within the real world, highlight AR's growing importance in industries such as education, manufacturing, and healthcare. Despite promising applications and growth prospects, the AR segment has lost attractiveness among venture capitalists. Investments are declining as the adoption of equipment and leading metaverse platforms lagged behind expectations. Even the introduction of the Vision Pro headset this year could not sustainably revive the market; reports indicate a decreasing demand for the $3,500 device, prompting the manufacturer to reduce its shipping forecast. The investment climate in the startup sector remains cool. Only about $464 million flowed this year into seed to growth stage financing for AR, VR, and metaverse-related companies, which could make 2024 the year with the lowest investment amounts in a long time. Nonetheless, there were notable funding rounds: Rokid, a manufacturer of AR glasses, managed to raise $70 million in January. Beijing-based Xreal, a provider of more affordable mixed-reality glasses, also raised $60 million in January at a valuation of $1 billion. Particularly noteworthy is the strategic partnership between Google and the AR startup Magic Leap, indicating that the tech giant is considering re-entering the AR and VR market, despite largely leaving it to competitors. About a decade ago, Google was a pioneer in this field, but enthusiasm waned due to design issues and privacy concerns. The global AR market, estimated at $32.1 billion in 2022, is projected to grow from $42.85 billion in 2023 to $432.35 billion by 2031, according to SkyQuest data, representing a compound annual growth rate of 33.5%. A significant submarket is Mobile AR, which leverages the widespread use of smartphones and tablets. Forecasts for this year suggest that 1.7 billion devices could support Mobile AR. Thanks to existing hardware, Mobile AR, in contrast to AR glasses, finds easier dissemination and promises growth in both the corporate and consumer sectors. Amazon.com, Inc. offers advanced tools for AR and VR developers through its Amazon Web Services (AWS) platform. Applications like Room Decorator and Virtual Try-On expand the offerings. In the first half of 2024, Amazon.com, Inc. reported a 141% year-over-year increase in operating profit, with the majority of the profit coming from AWS, which contributed 84% of the operating income in the second quarter. According to industry forecasts, AWS could achieve annual growth of 15% to 21% by 2028, making Amazon's performance a crucial factor for profit forecasts. Our analysis of hedge fund data for the second quarter of 2024 showed that 308 out of 912 tracked hedge funds held shares in Amazon.com, Inc. The largest stake was held by Fisher Asset Management with an investment of $8.46 billion.