3 stocks to buy to invest in augmented reality

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Augmented Reality (AR) has become a mass market phenomenon with the Pokémon Go in 2016, when millions of people downloaded the app to search for virtual creatures in their neighborhoods. Besides being a fun activity, the the game is a good example what AR is and how it can be used in everyday life.

As technology improves, applications for healthcare, engineering design, construction, retail, e-commerce, and other industries will expand. If you want to invest in this tech trend, three companies that should benefit from AR are Apple (NASDAQ: AAPL), Etsy (NASDAQ: ETSY), and Autodesk (NASDAQ: ADSK).

Let’s take a look at how everyone plays in augmented reality and why these stocks should be in your portfolio.

Image source: Getty images.

1. Apple is accelerating the development of AR application software

In 2017, Apple released its ARKit for software developers to enable the creation of augmented reality applications in its ecosystem. Since then, it has grown into “the world’s largest augmented reality compatible platform” with thousands of apps released for users. Its huge install base of over 1.5 billion iPhones worldwide makes it attractive to its tens of millions of software developers to build new AR apps. Whether it’s an app that allows students to see inside the human body as it moves, a landscaping design visualization tool, or the Warby Parker app that lets you shows what your glasses look like on your face before you buy them, AR apps are becoming more and more common. .

Apple doesn’t release details of its AR business, but its services segment, which includes sales from its app stores, is now growing faster than its hardware segment. In the last quarter, services generated revenue of $ 13.2 billion, an increase of 15% year-over-year. Have augmented reality capabilities for developers and tight integration of its hardware and software gives the company a technological advantage over its competitors in the space. Add the fact that CEO Tim Cook can’t contain his enthusiasm for AR and “big bets” in technology, and it becomes a solid AR buy in the long run.

2. Autodesk incorporates AR technology to shorten the design cycle

Autodesk’s flagship product, AutoCAD, is a computer-aided design (CAD) software package for architects, engineers, construction professionals, and even computer game designers. Its software has come a long way since it became the first CAD software to run on a PC in 1982. Today, its powerful cloud-based software uses augmented reality to enable visualization of a 3D design on a PC. the construction site, virtual reality to visualize a factory before it is built, and mixed reality that allows designers to manipulate design models with their hands. These advanced technologies are not only cool, they help shorten the time it takes to bring ideas to life, saving customers money.

Management estimates the market for its software at $ 52 billion per year today, reaching $ 69 billion by 2025. Its revenue of $ 3.3 billion in 2019 represents less than 5% of the total. market of 2025, which gives it a lot of leeway. In June, the management put the business objectives during its investor day for a compound annual growth rate of 16% to 18% over the next three years and $ 2.4 billion in free cash flow by fiscal 2023. The company is off to a good start in the first quarter of 2021 (ending April 30, 2020), achieving 20% ​​year-over-year revenue growth and free cash flow of $ 307 million. Management is confident that it can achieve its goals even with the uncertainties of coronaviruses, making this technology a mainstay a purchase today.

3. Etsy uses AR to “keep commerce human”

Etsy hosts an online marketplace for artisans to sell handmade items to over 60 million active buyers and uses technology to improve the experience for its customers. It is using artificial intelligence to provide “world-class” research capabilities and augmented reality to allow buyers to view any item in its category paintings, photographs and prints inside their home. The 5 million wallcoverings are a small subset of the 66 million items available, but the company said in a June blog post that this new feature is only the “first step in implementing augmented reality to create a more visual shopping experience “.

Buyers are drawn to this market because of the breadth of unique handcrafted items available. It makes sense that the company is embracing technology to give buyers a more personal connection to the special products it sells in support of its mission to “keep commerce human.” This was a winning formula for the brand because it blown by its first quarter of $ 2 billion in gross merchandise sales (GMS), generating a record second quarter revenue of $ 429 million. This sales milestone came just 10 quarters after its first billion dollars in gross merchandise sales.

Etsy will continue to rely on AR and other technologies to improve its platform, making it a great buying opportunity for this tech and people-driven marketplace.

The reality for investors

Whether it’s Apple’s powerful augmented reality software development platform, Autodesk’s time-saving AR features, or Etsy’s use of AR to bring works to life. art in your home, the future of this technology is exciting. Buy shares of any or all of these three technology-driven companies will allow you to take advantage of this growing trend.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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