One prediction says that from 2024 to 2030, the metaverse market will grow at a compounded annual growth rate (CAGR) of 38%, leading to an eventual $507.8 billion valuation, putting it on the radar for every savvy investor. However, does the growth figure mean you should buy metaverse stocks on the dip?
The answer is yes. An easy reason for this is the many partnerships around the concept. Hexagon and Microsoft (NASDAQ:MSFT) is a classic example, as is CoStar‘s (NASDAQ: CSGP) acquisition of Matterport (NASDAQ:MTTR) for $1.6 billion. That alone was big news for real estate and 3D digital twin technology. It also indicates that the metaverse’s real-world applications are highly valued and already relevant to investors.
With double-digit market growth and all these industry changes, let’s look at some metaverse stocks to buy when they go down. Each of these stocks has a double-digit upside as well. The first pick gives you the hardware for the metaverse. The second one is a favorite among developers. The last option is famous because it has a unique game engine.
Nvidia (NVDA)
Metaverse systems need Nvidia‘s (NASDAQ:NVDA) graphics processing unit (GPU) technology to make their graphics and virtual worlds look good. Ray tracing improves the look of virtual worlds on GPUs from Nvidia’s RTX line by adding accurate lighting and shadows.
Nvidia’s edge computing solutions also lower the delay in large virtual worlds by handling data closer to where it comes from. Its CloudXR also streams from the cloud so you can have realistic virtual reality (VR) and augmented reality (AR) experiences even if you don’t have powerful gear nearby.
Nvidia’s Omniverse, on the other hand, is a big step forward for real-time models and simulated worlds. Upwork (NASDAQ:UPWK) says that by 2025, 22% of all Americans, or 32.6 million people, will work from home, making the Omniverse a key part of NVDA’s portfolio.
Last, the company is also making new products, like Blackwell series microchips with better artificial intelligence (AI), because the need for AI is growing.
The stock price, unfortunately, is having a hard time breaking above $950. Analysts still think that the stock will go up because of progress made in AI. The average price target is around $1,005, with an upside potential of 26%, making it one of the best metaverse stocks to buy on the dip.
Unity Software (U)
Even though Unity’s (NYSE:U) platform is easy to use, its stock is down over 39% because of lower-than-expected earnings for the current quarter. The upside potential, however, is over 36%.
With a business model built on subscriptions, Unity has added more products by forming smart agreements and buying other companies. But the most recent quarterly numbers are mixed.
Even though Unity made more revenue than expected, its loss per share was 66 cents instead of 46 cents per share. Unity is realigning its main business groups to improve operations efficiency and cost management. Non-GAAP running costs will go down by $250 million a year.
The business hopes to finish the first part of its strategic restart to focus on its core business by the end of the first quarter. Unity plans to lower costs and speed up growth in the second half of 2024.
On a brighter note, Unity Software’s primary membership business gained 18% outside China in Q4 2023. This year, the metaverse market in China will hit $15.9 billion, so how well Unity does in this market is very important.
Last, the company made using Ziva VFX and other related technologies easier. Ziva VFX is a new way to create visual effects and real-time rendering, improving the company’s technology stack and developer support.
Roblox (RBLX)
Like social media businesses, Roblox (NYSE:RBLX) seeks to retain young people in the ecosystem for life. It’s easier said than done. The stock was popular while youngsters were bored at home during the COVID-19 pandemic. With schools open, it must compete for time. No suprise, the stock is down over 18% in 2024.
However, on balance, RBLX is not doing too badly, with the latest quarter a beacon of hope for investors looking for metaverse stocks to buy on the dip.
Roblox’s Q4 sales rose 30% to $749.9 million, and bookings rose 25% to $1,126.8 million. Compared to last year, daily average users (DAUs) rose 22% to 71.5 million. DAUs for users 13 and over increased by 28%, making up over 58% of the entire DAU base.
Roblox’s worldwide growth has grown 23% in DAUs outside the U.S. and Canada. Noteworthy increases include 45% in Japan and 59% in India. The quarter witnessed the most brand interactions, with 69 big companies engaging.
Altogether, with healthy growth and an expanding presence outside North America, RBLX stock has what it takes to realize its 42% upside potential.
On the date of publication, Faizan Farooque 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.
