Aashi Mishra
Imagine talking to a person who is hundreds of kilometers away but seems as if they are right beside you. Or a virtual training system so precise that it feels as if you’re doing it in person. These examples are happening in the real world with the help of extended reality (XR). From doctors demonstrating crucial medical procedures in a virtual classroom to a teacher showing an Egyptian pyramid to students, XR has a broad horizon of applications.
The XR market is projected to reach nearly $350 billion by 2034, increasing exponentially at a compound annual growth rate (CAGR) of 20.6%, driven by advances in 5G, AI and wearable technology. Unlike fleeting tech trends, XR solves real-world problems, enhancing education, revolutionizing retail and even redefining remote work.
Blending creativity with practical utility, XR looks to be a promising bet for future-focused investors.
The XR Market’s Upward Trajectory
The numbers show that XR market demand is not mere speculation. In 2024, Research Nester reported that the market was already valued at $56.5 billion, fueled by enterprise adoption. As factories shift from smart glasses to paper manuals, the manufacturing industry is experiencing a growing demand for augmented reality (AR).
According to a study, the demand for AR in manufacturing is increasing at a CAGR of about 30%. Healthcare is not lagging far behind. Virtual reality (VR) is becoming a staple in training centers and is projected to reach more than $5 billion by 2027. About 80% of Fortune 500 companies indicated using XR systems. These figures indicate that the demand for XR across different industries is real and trending upward.
Shifting Industry Dynamics
The biggest players in tech are getting in on the action. Meta Platforms Inc. has poured more than $36 billion into XR since 2019, while Apple’s Vision Pro headset is selling for $3,500. And Microsoft’s $22-billion HoloLens military contract confirms that AR is not only for gaming purposes.
On the startup side, Magic Leap has pivoted toward the defense sector and secured more than $500 million in funding, while Nvidia’s Omniverse is building the backbone of the industrial metaverse. Even Snap’s Snapchat quietly acquired six AR startups in 2023. Investors are targeting both hardware platforms and specialized enterprise XR tools to maximize opportunities.
A Real-World Problem-Solver
Extended reality has the potential to help solve critical global challenges within healthcare, education, disaster response and industrial safety. On the factory floor, XR can be used to address sustainability issues. Digital twins help to prevent more than 15% of CO2 leaks, while AR-guided wind turbine repairs cut downtime by almost 25%. In addition, disaster-management teams are using XR prototypes such as RoutScape to plan flood evacuations with spatial simulations.
Meanwhile, more than 71% of medical organizations used AR/VR in 2021, with the healthcare XR industry expected to reach more than $14 billion by 2028. This is driven by the increasing adoption of training centers and surgical planning to mitigate medical errors. Surgeons who use VR training reduce errors by about 40%, according to Harvard Medical School.
The traditional concept of “build, train and work” has pivoted with the advent of extended reality, which offers limitless potential that industries are just beginning to explore. With global adoption rising and real utility driving demand, XR holds long-term value.
