3 Stocks That Benefit From The Metaverse
In the eyes of many, the metaverse is a once science-fiction dream that has become a reality. The metaverse is a term used to describe a virtual world emerging with advancing technology. Unlike Sims and Second Life, the metaverse is more than a single game — it’s an entirely new way to interact online.
Think of the metaverse as a network of 3D virtual worlds, focusing on social connections that will develop through artificial intelligence (AI) and machine learning.
From online gaming to NFTs, there are plenty of ways for investors to gain exposure to the forecasted exponential growth of the metaverse. Among the biggest players are Roblox, a gaming company, as well as Nvidia and Qualcomm, chip manufacturers that makes virtual worlds possible.
1. Nvidia
Nvidia Corp. (NASDAQ:NVDA) first went public in 1999, before the company struck a deal to put its graphic processing units in PlayStations and Xboxes. Fast forward to 2022 — Nvidia’s chips are used for everything from artificial (AI) and virtual reality (VR) applications to data centers and supercomputers. The company plays a role in the digital world, and Nvidia is expected to remain a key player in the developing metaverse.
Over the past year NVDA’s shares are up by more than 120%. Shares of NVDA skyrocketed after several analysts shared optimistic views of this valuable semiconductor company’s long-term potential, particularly in the metaverse and gaming space. For example, Matthew Ramsay, an analyst at Cowen, believes that, catalyzed by metaverse growth, NVDA could reach $140 billion in annual sales by 2030. Over the last twelve months, NVDA has generated just under $27 billion.
Although the market has been volatile over the past six months, Nvidia’s revenue diversification across data centers, gaming, and the metaverse suggests the company is positioned for solid growth over the long term.
2. Qualcomm
Qualcomm (NASDAQ:QCOM) was first founded in 1985, specializing in semiconductors, wireless technology services, and software.
Over the past 5 years, Qualcomm’s share price has increased by more than 170%, and while the stock’s growth slowed to 24% over the past year, the metaverse could be the spark to reignite faster growth. The company is known for its wide range of hardware and software products, including its role in powering smartphones, laptops, and data centers.
Qualcomm chips also power the Oculus Quest 2 VR headsets sold by Meta Platforms (NASDAQ:FB). In February 2022, Meta reported that its VR platform grew users by 10x.
Management also announced a major collaboration with Microsoft. The goal is to expand and accelerate augmented reality (AR) to help pave the way for a future with the metaverse front and center.
3. Roblox
Roblox (NASDAQ:RBLX) has gotten plenty of attention lately. After hitting all-time lows, shares of RBLX are finally starting to catch a bid. In a single day recently, on March 17, 2022, RBLX shares gained 12%, providing some relief following a 73% decline since November 19, 2011.
This online gaming platform is one of the closest things to a functioning metaverse. The platform offers Roblox Client, Roblox Studio, and Roblox Cloud, which collectively provides users with the ultimate virtual universe.
There’s no doubt that the metaverse is still in its early stages. However, Roblox is an industry leader, helping developers, customers, and merchants understand the term “metaverse.”
Although RBLX has yet to turn a profit, the company had a record fiscal year in 2021, with revenues increasing 108% over 2020.
Average daily active users and hours engaged also significantly increased by 33% and 28% year over year, respectively.
Is Now the Time to Buy?
If you believe the metaverse has the potential to mushroom in size over the next decade, now is an excellent time to start investing in companies tethered to its forecasted exponential growth. These three stocks are well-positioned to prosper in a growing metaverse reality.
