With a new generation of gaming consoles set for 2020 release, gaming stocks are presenting us with some of the best opportunities of the year.
When Microsoft (NASDAQ:MSFT) releases its new Xbox console, and Sony (NYSE:SNE) releases its PlayStation 5, we expect to see higher highs in top video game stocks. After all, “If you’re a gamer, if you drop $400 to $500 for a console, you’re obviously going to buy some games, too,” said Jefferies analyst Alex Giaimo.
In short, it should be an exciting new year for gaming stocks — and gamers.
With that said, here are three of the top gaming stocks to watch in 2020 as new console releases near.
Gaming Stocks to Buy: Activision Blizzard (ATVI)
Activision Blizzard (NASDAQ:ATVI) is a no-brainer with new consoles.
ATVI stock was badly beaten down in late 2018. However, I strongly believe most of the negativity has been priced into the stock. Up 27% year-over-year, I believe ATVI could soon refill its bearish gap around $65 a share.
From there, I believe ATVI could retest its highs of $85 with new consoles.
If there are new consoles on the way, new games will quickly follow from the likes of Activision Blizzard, as I’ve noted. That’s part of the reason SunTrust Robinson Humphrey analyst Matthew Thornton has a “buy” rating on the stock. Also, he notes strong execution for recent releases like World of Warcraft Classic, Call of Duty: Mobile and Call of Duty: Modern Warfare.
Additionally, Benchmark analyst Mike Hickey is also bullish on ATVI. He expects earnings and revenue growth through fiscal 2022 thanks to new consoles and a strong pipeline of gains. And, like Thorton, Hickey also notes that strong sales from Call of Duty: Mobile and Call of Duty: Modern Warfare.
Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) is another no-brainer ahead of new console releases.
Much like ATVI stock, EA was crushed in the latter half of 2018. However, I believe all of the negativity has been priced in. Up 21% YOY, EA stock could refill its bearish gap around $130 per share as we near new gaming consoles.
Hickey anticipates management to raise its 2020 outlook when the company releases earnings for third quarter on Jan. 30. He also expects to see sales and earnings above EA’s current outlook on the heels of new releases, including Jedi: Fallen Order, Apex Legends Season 3, Need for Speed Heat, and Plants vs. Zombies: Battle for Neighborville.
Additionally, Thornton raised his price target on the stock to $113, citing a shift to digital gaming, console upgrades and improving revenue. FIFA/Madden esports league development should be a strong catalyst, too.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) may not be a video game stock, but it’s also one of the top stocks to own with the release of gaming consoles.
AMD CEO Lisa Su says the company is working with both companies on their next-generation consoles and notes, “2020 is going to be a big year for consoles.”
Overall, AMD beat out major competitors to get into these consoles.
All because AMD had better technology in almost every area including IP, CPU, GPU, memory, video, audio and I/O.
“Assuming that Sony and Microsoft sell 140 million next-gen consoles between 2021 and 2025, and AMD sells its APUs [accelerated processing units] for about $100 apiece, those consoles could generate $14 billion in sales for AMD over five years, or $2.8 billion in annual sales,” says Motley Fool contributor Leo Sun.
Those are some pretty good numbers all around for these three gaming stocks.
As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.