In the bustling world of financial markets, pinpointing the next game-changer isn’t always straightforward. However, if there’s one industry poised to redefine modern entertainment, it’s esports. As digital arenas light up worldwide, top esports stocks are attracting attention.
If you’ve been considering dipping your toes into this sector, you’re not alone. In today’s article, we’ll take a look at the best esports stocks for investment. Beyond the excitement of high-powered tournaments lies a treasure trove of esports stocks to buy with plenty of potential.
In 2022, Fortune Business Insights estimated the global esports market at $1.45 billion. This figure is expected to increase to $1.72 billion in 2023 and $6.75 billion by the end of 2030. Similarly, Statista’s forecasts align with this upward trend, anticipating an 8.31% annual growth in revenue between 2023 and 2027. Furthermore, projections indicate that the user base, which currently stands at 7.6% in 2023, is expected to rise to 9.1% by 2027.
Given these impressive growth projections, which esports stocks should be on your radar for their high potential? Let’s dive in and uncover the most promising picks in the arena of digital competition.
Microsoft (MSFT)
This year, Microsoft’s (NASDAQ:MSFT) remarkable achievements firmly position it as a leading contender among the top esports stocks worth monitoring closely. The tech behemoth has exhibited robust financial health, delivering a 40% return year to date.
Its latest earnings release for Q4 2023 highlights the strength of its cloud operations. Indeed, the company reported 8% year-over-year (YOY) growth in revenue to $56.19 billion and an almost 20% jump in net income to $20.08 billion.
Microsoft is a major player in numerous sectors, not least of which gaming. One of the most significant potential advancements for Microsoft enthusiasts in this field is the potential acquisition of Activision (NASDAQ:ATVI). The multinational tech giant unveiled this deal last year. Despite facing regulatory obstacles, the acquisition now appears increasingly likely. The U.S. Ninth Circuit Court of Appeals most recently threw out the Federal Trade Commission’s attempts to obstruct the transaction. The European Union has likewise given its green light. Nonetheless, the deal continues to face scrutiny in the U.K.
Evercore ISI states that the deal helps complete the gaming strategy for the tech conglomerate. Meanwhile, Wedbush said the combination of advanced cloud infrastructure and artificial intelligence (AI) technologies sets the stage for Microsoft to flourish.
The statements reinforce Microsoft’s status as one of the premier investment opportunities in the esports sector. Hence, investors seeking a “secure” investment in the esports world will find Microsoft attractive. Given the company’s scale, it can invest billions in the field without batting an eye.
Nvidia (NVDA)
In the second half of 2023, Nvidia (NASDAQ:NVDA) stands out as one of the top esports stocks to buy. Delivering a staggering 220% year-to-date return, NVDA remains a solid esports stock. This is largely due to its multifaceted growth strategies and consistent performance. The first quarter of fiscal 2024 saw a remarkable 28% increase in diluted earnings per share, beating expectations by 19%.
Nvidia’s foray into cloud AI supercomputing and its collaboration with Microsoft to bring PC Game Pass to Nvidia’s GeForce Now service are steps worth noting. These strategic moves, combined with rumors of its next-gen GeForce RTX “Ada-Next” gaming GPU featuring a colossal 512-bit bus, bring Nvidia to the fore as one of the best esports stocks for investment.
With analyst Vijay Rakesh from Mizuho bullish on Nvidia’s prospects, especially it’s potential to unlock $300 billion in AI-related revenue by 2027, the investment horizon for Nvidia looks particularly bright. Undoubtedly, Nvidia is a high-potential esports stock that should be on every investor’s radar.
Sea Ltd (SE)
Sea Limited (NYSE:SE) is emerging as a crucial player in the esports landscape. Despite a disappointing Q1 earnings miss, leading to a 17% dip in stock value, the Singapore-based tech giant offers a compelling investment narrative. That narrative revolves around the thriving Esports sector.
With a year-to-date return of 27%, Sea Limited, bolstered by its digital entertainment arm Garena, stands out among top esports stocks. The robust 115% growth in net income, escalating to $87.3 million, even amid revenue growth at a more modest 5% to $3.04 billion, showcases the company’s potent capability to enhance profitability. However, an earnings per share (EPS) miss of 37% signals some operational challenges that need tackling.
Sea earns a spot on the list of esports stocks to buy largely due to the success of Free Fire. For the uninitiated, it is a battle royale game Garena developed and published. Sensor Tower’s 2021 research confirmed the game’s impressive financial success, reporting a staggering $1.1 billion in revenue from January to December. More recently, this June, it emerged as the most downloaded game once again.
Overall, Sea Limited is an intriguing, high-potential esports stock for investors. The Singapore-based firm boasts significant market dominance, diversified business units, and a proven track record of resilience. Hence, investors seeking robust growth in esports should certainly have Sea on their radar.
On the publication date, Faizan Farooque did not hold (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.
