Metaverse, metaverse, metaverse. That’s all we seem to hear about these days, particularly those of us in the tech stocks. Companies can’t stop talking about it and it’s creating the illusion of the next great digital gold rush. So of course, that leads us to the next discussion topic: Metaverse stocks.
The idea is that, in a digital world that keeps expanding and becoming more immersive, it’s an area that more consumers will want to spend time. It’s defined as “a network of 3D virtual worlds focused on social connection.”
The craziness of all of it is just how fast this became a buzzword. It’s popping up all over quarterly conference calls, in filings to the Securities and Exchange Commission (SEC) and in stories for investors.
It’s not necessarily a new concept, but it’s one that recently caught on. With all of that in mind, these metaverse stocks are ones investors should consider buying now.
- Meta (NASDAQ:FB)
- Unity Software (NYSE:U)
- Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG)
- Snap (NYSE:SNAP)
- Microsoft (NASDAQ:MSFT) and Activision Blizzard (NASDAQ:ATVI)
- Nvidia (NASDAQ:NVDA)
- Match Group (NASDAQ:MTCH)
Now, let’s dive in and take a closer look at each one.
Metaverse Stocks to Watch: Meta (FB)
When we’re looking at metaverse stocks, it’s hard to look past Facebook. Or shall we say, look past Meta.
Along with changing its name, the company will also change to the ticker “MVRS” sometime in the first quarter. In other words, Facebook is looking to make a full-blown push toward the metaverse to power its next wave of growth.
Love the platform or hate it, it’s hard to argue that Facebook hasn’t built a juggernaut in the social media space. Its Facebook and Instagram platforms dominate, and several years ago, the company acquired WhatsApp. On top of that, it also acquired Oculus, a virtual reality (VR) company.
If the two can come together — VR and social media — investors have to look at Meta as a potential metaverse winner. Plus, the stock is down about 33% from its recent high. That may make it worth another look, too.
Unity Software (U)
Unity Software is such a unique and cool company. Yet, it continues to fly under the radar for many investors. That’s even as the company boasts a $31 billion market capitalization, despite the stock currently trading lower by about 50% from recent highs.
So, what does this company do? From Unity Software:
“Welcome to Unity. We are the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content. We empower creators. Across industries and around the world.”
Moreover, Unity also has incredible growth expectations. Consensus expectations call for annual revenue growth between 29% and 35% for each of the next four years. Additionally, the company’s near break-even operations.
Therefore, if you’re looking for metaverse stocks to buy, Unity is one to keep your eye on.
Metaverse Stocks to Watch: Alphabet (GOOGL, GOOG)
Three stocks in and we’ve already mentioned two FAANG components. It will be the last from that group, but it’s hard to exclude some of the larger tech giants from this discussion.
Overall, Alphabet continues to floor the investment community. Last quarter, the company handily beat earnings and revenue expectations, growing the latter by more than 30% year-over-year (YOY). It was the company’s eighth-straight quarterly revenue beat as well.
Aside from recently announcing a 20-for-1 stock split, Alphabet also discussed the metaverse. Beyond its enormous role in search, video via YouTube and cloud-computing, it has plans for the metaverse too.
With its YouTube platform, the company wants to begin bolstering some of its metaverse activities, specifically regarding gaming and non-fungible tokens (NFTs). The company also wants to leverage the blockchain in these efforts.
So, given its reach and scale, I wouldn’t rule out Alphabet among other metaverse stocks.
Due to the social nature of the metaverse, it’s hard to overlook social media platforms in this effort. Snap is one such platform that I believe deserves our attention. Why? Because a multi-year effort has already been made here and it shouldn’t be overlooked.
First, the company is one of the few social media stocks that are actually performing well. Just take a look at the post-earnings responses we’re seeing from the space. Snap shares erupted higher after reporting better-than-expected earnings. Bear market aside, Snap’s larger efforts surround its augmented reality (AR) business.
The company has forayed into the AR business in the past, most notably with its Snap Lenses. As the firm states, “Lens Studio is a powerful application designed for artists and developers to build augmented reality experiences for hundreds of millions of Snapchatters.”
Given these efforts, it’s hard for me to imagine a scenario where Snap doesn’t eventually become a metaverse stock to focus on.
Metaverse Stocks to Watch: Microsoft (MSFT) and Activision Blizzard (ATVI)
The FAANG group has come under quite a bit of antitrust scrutiny over the last few years, hasn’t it? Big tech has turned into mega-cap tech as their market caps swell into the multi-trillion-dollar range.
I don’t know if that’s surprising because the company has had its monopolistic run-ins with the government in the past, or if it’s because it too is a mega-cap company with a $2.2 trillion valuation.
Either way, Microsoft has avoided the antitrust spotlight. That likely made its recent acquisition of Activision Blizzard a little easier to pull off. The near-$69 billion deal was recently announced in January and will thrust Microsoft even further into the gaming world.
Already the owner of Xbox and the popular gaming series Halo, there’s little question about what Microsoft’s goal is: To grow its gaming empire and develop a new leg of growth.
Microsoft can become one of the metaverse stocks beyond gaming, though. Its Teams platform would be a realistic and quite frankly, productive form of using the metaverse and conducting virtual meetings. Therefore, there are multiple catalysts working in favor of MSFT stock.
All of this talk of the metaverse and all of these platforms that are going to be involved raises one important question: Who the heck is going to power all of this?
That, my friends, will be Nvidia.
While Nvidia obviously won’t be the only one powering the move to the metaverse, it will play a key role. Its products and graphics processing units (GPUs) are a huge component in graphics. Not just powering computer screens, but in actually being used to make digital environments.
Beyond that, though, its products play a big role in powering cloud computing and data centers. Furthermore, Nvidia is also in VR and AR technologies and of course, CEO Jensen Huang & Co. have plans for the metaverse.
From the company:
“The metaverse will become a platform that’s not tied to any one app or any single place…[j]ust as virtual places will be persistent, so will the objects and identities of those moving through them, allowing digital goods and identities to move from one virtual world to another, and even into our world, with augmented reality.”
So, with all of this in mind, Nvidia appears to be another metaverse stock for investors to watch.
Metaverse Stocks to Watch: Match Group (MTCH)
Last but not least, we have Match Group.
There are plenty of other names that could also be included on this list. I would consider Roblox (NYSE:RBLX), Immersion Corporation (NASDAQ:IMMR) and Advanced Micro Devices (NASDAQ:AMD) as three more to add, among others.
However, Match Group seemed so interesting to me. While the stock has been hammered by the current bear market, what better application to apply the metaverse to than online dating?
Those looking for a meetup can do so in a virtual space, particularly if they don’t live nearby. It really opens up some possibilities. Plus, the company’s got great growth and is healthily profitable.
Moreover, analysts expect 15% to 18% revenue growth each year for the next four years through FY 2025. They also expect solid earnings growth, including around 25% growth this year, 20% next year and 27.5% in FY 2025.
On the date of publication, Bret Kenwell held a long position in NVDA and SNAP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.