We recently published a list of 11 Best Augmented Reality Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Adobe, Inc. (NASDAQ:ADBE) stands against other best augmented reality stocks to buy according to hedge funds.

According to a report by Mordor Intelligence, the global AR market is anticipated to grow at a notable compound annual growth rate (CAGR) of 42.36% between 2024 and 2029, reaching $248.38 billion by the end of the forecast period. It currently has a market size of $42.48 billion as of 2024. While the largest market for the industry is North America, the Asia Pacific region is anticipated to be the fastest growing.

The report also highlighted that a significant portion of this market is mobile AR, which leverages the globally spread use of smartphones, tablets, and other smart devices. Some estimates show that nearly 1.7 billion devices can support mobile AR as of 2024. Therefore, the massive and globally spread smartphone user base gives the AR industry a key competitive advantage.

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Trends in the Augmented Reality Space

The Immersive Entertainment—Global Strategic Business Report 2024 showed that the global market for Immersive Entertainment was $133.6 billion in 2024. It is expected to grow at a compound annual growth rate of 23.5% between 2024 and 2030, reaching $473.9 billion at the end of the forecast period. Thus, the global AR market is also likely to benefit from the expansion of the immersive entertainment industry.

The AR market is yet to reach the apex of its potential, and experts estimate that it will do so in about a decade. Many technological advancements in the industry support this growth, as tech giants have been scrambling to attain the AR and mixed reality dream for years. Investments worth billions of dollars have been directed to the cause. According to SkyQuest, the largest investment is being poured into training and industrial maintenance, with figures reaching as much as $4.1 billion in the field of AR. Apart from this, private firms, VCs, and even some governments are financing AR research institutes and teams.

The augmented reality industry has a primary user base comprising healthcare, aerospace and defense, consumer, and retail. In addition, the technology is being increasingly used in the automotive industry. Since autonomous vehicles are becoming a rising trend across the globe, the integration of AR in these vehicles is supporting the broader AR industry. AR technology helps improve the driver and the autonomous system’s comprehension of their environment by overlaying digital data in the real world. In addition to several other features, consumers can interact with virtual 3D models of vehicles with the help of AR technology in showrooms, allowing them to visualize several customizations.

Another key growth driver for the industry is the use of AR in hospitals and medical startups. The healthcare sector continuously uses immersive modalities to streamline its processes, as surgeons are increasingly leveraging AR to deal with the potential risks of healthcare procedures. AR is helping healthcare professionals reduce the rate of errors and the number of potentially unsafe surgeries. According to SkyQuest, the AR segment in the healthcare industry was expected to reach $1.2 billion by 2024.

With these positive future trends for the AR industry in view, let’s look at the 11 best augmented reality stocks to buy according to hedge funds.

Our Methodology

We sifted through stock screeners, financial media reports, and ETFs to compile a list of 25 stocks operating in the AR space and chose the top 11 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment. Our focus was on companies producing AR-related hardware, software, or technologies used to develop augmented reality products. However, we also included companies that offer services essential to the AR industry, like semiconductor chips.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).

A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.

Adobe, Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 117

Adobe Inc. (NASDAQ:ADBE) is a US-based global technology company that offers services, products, and solutions to fuel digital experiences and imagine, manage, optimize, and engage with content across surfaces. The company’s digital media segment, centered around Adobe Document Cloud and Adobe Creative Cloud, also offers platforms like Adobe Firefly, Adobe Express, Photoshop, and other tools for creative professionals and other consumers.

Adobe Inc.’s (NASDAQ:ADBE) approach to AR is integrated into its Creative Cloud platform, which employs tools like Adobe Aero. Aero is an all-in-one authoring and viewing platform that allows users to create creative interactive AR experiences without needing advanced coding skills. This makes the platform user-friendly and highly accessible. The company is working to improve the platform for intuitive storytelling, ranking it sixth on our list of the best augmented reality stocks to buy now.

On April 25, Keith Weiss, an analyst from Morgan Stanley, maintained a Buy rating on Adobe Inc. (NASDAQ:ADBE) with an unchanged price target of $510.00. The analyst supported this rating with the company’s growth potential and current valuation, saying that its innovative capabilities and pricing power are being underappreciated by investors. The market is skeptical, as seen in Adobe Inc.’s (NASDAQ:ADBE) low valuation.

However, Weiss opined that this undervaluation represents an attractive opportunity for long-term growth. He pointed out that the market is currently pricing in a slowdown in the company’s long-term earnings growth, estimating it to be around 8% per annum compared to Wall Street expectations of a 12% compound annual growth rate. The analyst argued that Adobe Inc.’s (NASDAQ:ADBE) potential for margin expansion and expedited pace of product innovation could support higher-than-expected growth. As a result, the current share price does not highlight the potential for mid-teens EPS growth, making Adobe Inc. (NASDAQ:ADBE) an attractive investment at the present.

Overall, ADBE ranks 6th on our list of best augmented reality stocks to buy according to hedge funds. While we acknowledge the potential for ADBE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than ADBE but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.