Caught In a Landslide, No Escape From Augmented Reality

Much like a landslide, the future of AR/VR tech is approaching ever closer and ever faster, and more and more firms are trying to pile onto the wave.

Everyone who’s watched Captain America: Civil War remembers that scene in the beginning where Tony Stark is presenting to MIT students for his foundation. A glimpse into his past, a memory before a great family tragedy, that was accomplished through the functions of augmented reality (AR). It all seemed so futuristic, cool, and for many, desirable. Yet, that future is not as far off as most think.

 

So, what makes you say augmented reality’s future is so bright?

AR/VR technology has been a disruptive tech industry with major growth potential, and it seems like its growth is accelerating. Industry reports project that the global AR industry was worth $17.67 billion in 2020, and is projected to grow with a compound annual growth rate (CAGR) of 43.8% from 2021 to 2028, while the global micro display industry will be worth 4.2 billion USD by 2025, with a CAGR of 22%

And in light of recent developments, these projections don’t seem inflated. Last month, Microsoft (NASDAQ: MSFT) signed a deal with the US Army to kickstart a $22 billion AR headset program. This deal involves the delivery of 120,000 Hololens AR headsets over the course of 10 years. This, coming not very long after the $480 million 2018 contract to deliver prototypes of the Integrated Visual Augmented System, or IVAS, to the Army shows that AR/VR tech is no longer a thing of the future, but is experiencing increasing demand and utility.

“I’m already seeing AR take off in some of these areas with use of the phone. And I think the promise is even greater in the future.” – Tim Cook, CEO of Apple (2021)

And they’re not the only ones getting into the race. Apple (NASDAQ: AAPL) has long been involved in AR/VR as well. There have been rumors that Apple would be releasing a set of AR glasses around 2022 or 2023, with an insider saying that an Apple VR headset may be released around the time that a new iPhone drops in 2022. 

And of course everyone is aware of Facebook (NASDAQ: FB) and its Oculus acquisition; although having released multiple Oculus devices in the past decade, Facebook still has about a fifth of its employees working on VR technology, a big nod to the place of VR in Facebook’s future.

 

Realizing unrealistic returns

The answer to that may be today. While the aforementioned developments are notable, if not significant, there are perhaps even less well-known but even higher potential developments going on beneath the noise of Big Tech. Indeed, over the past several years, small companies that specialize entirely in AR/VR tech have been starting and growing, and have recently been gaining major traction in the investment community.

The first of such companies is Vuzix (NASDAQ: VUZI). Vuzix is a company that specializes in the production of wearable technology that involves augmented reality, mixed reality, virtual reality, and extended reality. They seek to target industries such as medical, electronics, OEM, and security & defense.

And despite its size Vuzix has seen major gains, both in its tech and its stock price. Year-to-date, Vuzix’s stock ran more than 170%, while flying more than 1450% in the past year. And those moves have been concentrated in the past few months: while Vuzix’s stock popped from around $1.50 in April 2020 to $4.50 in December, it is now trading at around $23 with a 52-week peak of $32.43.

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A model of Vuzix’s Blade Upgraded Smart Glasses

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These moves are not just hype and FOMO. Last month, Vuzix shares rose 16% on the news that it received an order for their M400 Smart Glasses worth $400,000 from a Fortune 100 company. Good news forsure, but immediately they again released news that The Cooper Companies “has successfully deployed Vuzix M400 Smart Glasses equipped with LogistiVIEW’s Vision+ augmented reality warehouse software” as a means of allowing their employees to work more efficiently, which sent the stock climbing an additional 29% the next two days.

The second, and perhaps more interesting, company is Microvision (NASDAQ: MVIS). Microvision is a company that produces Laser Beam Scanning (LBS) technology products, such as LiDAR scanners, with the purposes of projecting small displays in high definition and great detail. Such technology has obvious applications for the AR industry, and the concept of LBS mirrors that of Tony Stark’s own augmented reality device. 

In fact, Microsoft has been a longtime buyer of Microvision’s products, and Microvision is reportedly the very company providing materials for the Hololens 2 smart glasses, giving it some handle on the aforementioned Microsoft deal.

MicroVision is at an important inflection point in our history.” – Sumit Sharma, CEO of Microvision (2020)

And Microvision’s consistency with a (fictional) billionaire’s ideas seems to be effective. Microvision has an approximate market cap of 1.39 billion USD, and its stock has made major moves this year alone. In the past year, its stock has soared 5000%, and year-to-date its stock price is up almost 250%, while also frequently making moves of 20% or more into the green in a day. 

Just last week, Microvision shares rocketed 37% on Friday because of earnings hopes and Reddit action, and it popped more than 150% over the course of a week back in February based on increasing investor sentiment and official news of success in updating its long range laser technology. 

The company seems to be in good hands as well: Microvision’s CEO, Sumit Sharma, seems to have both ambition and extensive experience working with technology firms such as Google; he certainly does not seem to be a naive entrepreneur. Given the disruptive nature of Microvision’s technology and the volatility of its stock, having an experienced head is certainly necessary to keep the company on track. 

Even Luminar, Microvision’s competitor, recently acquired executives from Tesla and Intel; it seems like people from all the top tech companies, from Apple to Google to Intel, are bullish on the AR/VR wave.

 

Looking to the future [through a set of AR glasses]

As Microvision seeks to release earnings on April 29th, investors should keep a close eye out on not just how the stock price reacts but also what Sumit Sharma says about the future of AR/VR technology, while continuing to keep a lookout for news in the coming months and years. Like any pioneer technology industry, the AR/VR realm is full of visionaries who seek to change how the world sees the world. Investing in this industry may allow investors to effectively see their own portfolios’ returns as if through a pair of tech glasses: augmented, ideal, yet still quite real.

Christopher Koh
Christopher Koh

Christopher is a current 3rd year student at UCLA, pursuing a Bachelor’s in Economics and Political Science, and is seeking a career in buy-side finance. He works as an analyst for Internet Bull Report at UCLA, is the Director of Investments for the Business Law & Investing Society, and also worked as an investment banking analyst for Genz & Associates. Christopher’s passions include stocks, martial arts, and philosophy, and he spends most of his free time reading, cooking, and doing due diligence for his own stock portfolio.