The “metaverse” is a term that describes a shared virtual space where people from distant environments can interact, create, and consume digital content together. It is not a single platform or technology, but rather a vast network of interconnected virtual worlds that span various domains and applications. Similar to the way in which language-based artificial intelligence (AI) has changed the way people work, the metaverse is expected to change the way people interact with one another.
This will usher in a huge market opportunity for both patient and nimble investors as the metaverse offers new ways of entertainment, education, communication, and commerce. According to a report by Fortune Business Insights, the global metaverse market could reach $1.5 trillion by 2029, growing at a compound annual growth rate of 47.6%.
For investors who want to capitalize on this trend, here are three metaverse stocks that have a high potential to grow this year. If you are betting big on the metaverse, you better be buying these stocks on each and every dip.
Meta Platforms (META)
Back in October of 2021, Mark Zuckerberg made an important announcement that reoriented the established Facebook into Meta Platforms (NASDAQ:META) in order to be at the forefront of what we now consider to be the “metaverse.”
Today, Meta Platforms remains the world’s largest social media company and a pioneer of the contemporary metaverse conceptualization. Meta had been dipping its toes into virtual reality (VR) well before announcing its metaverse intentions. In 2014, the company bought Oculus, a leading brand of virtual reality headsets and content. Additonally, Meta purchased Horizon, a social VR platform that allows users to create and explore virtual worlds. Meta also operates Facebook Reality Labs, a research division that develops cutting-edge technologies for augmented reality, haptics, and neural interfaces.
Meta has a massive user base of more than 3.8 billion monthly active users across its family of apps including Facebook, Instagram, WhatsApp, and Messenger. The number of cumulative users alone gives Meta an impressive edge in building out and testing its novel social media endeavor.
A solid financial position also helps. Though revenues stagnated year-over-year in 2022, Meta still generated $116.5 billion in 2022 and $23.2 billion in net income, representing a 20% net margin. The social media giant’s surprising Q1’2023 earning revenue beat should also give investors hope that the company is worth betting on.
Roblox (RBLX)
Founded in 2004, Roblox (NYSE:RBLX) has slowly been able to transform itself from being just a computer game. The company has instead become a leading platform for user-generated content and social gaming, effectively embodying what everyone has said the metaverse would be. Its platform allows users to create, share, and play millions of 3D games and experiences across various genres and devices. Roblox also offers tools and services for developers and creators to monetize their content and engage with their audiences.
Recently, the gaming platform has launched new developer tools which leverage generative AI to help software programmers of various levels write the code that creates games. Novel developer tools combined with Roblox’s massive and loyal base of more than 61 million daily active users will help the company carve out a spot as a leading metaverse platform.
Furthermore, the company has a strong financial position with revenue growing 16% year over year to $2.2 billion in 2022 and bookings increasing 5% to $2.8 billion. Notably, the stock has soared 46% year-to-date. Analysts have also been impressed with Roblox’s international user base growth, a source of future opportunity for the platform.
Nvidia (NVDA)
The graphics card behemoth Nvidia (NASDAQ:NVDA) perhaps needs little introduction at this point. Though its well-known for its powerful graphics cards, the company is slated to be a key player in developing the metaverse. Similar to how Nvidia’s A100 and H100 tensor core graphical processing units (GPUs) currently power extensive language learning models to build AI chat-bots, the company’s GPUs and AI solutions will aid in powering the metaverse. Its graphics cards already enable high-performance rendering and simulation for 3D graphics, virtual reality, and cloud gaming.
In order to make significant headway in building out tools for metaverse developers, Nvidia announced Omniverse in March of last year. Leveraging Nvidia’s RTX-enabled GPUs, Omniverse allows creators and developers to collaborate and build realistic 3D worlds. Recently, Nvidia Nvidia partnered with Microsoft (NASDAQ:MSFT) to build what they call the “industrial metaverse” by providing Microsoft’s enterprise users with access to Omniverse.
These investments and partnerships will carve out a strong market position for Nvidia in the metaverse space, and its dominant share of the GPU market and a loyal customer base of gamers and developers will only help the company flourish in this nascent market.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
