Gaming stocks stand to benefit from the rise of many game-changing technologies slated to rise steadily over the next 10 years. From virtual reality gaming to generative artificial intelligence (AI) and game streaming, the video game titles of the future stand to offer profound interactive entertainment experiences. This has led to investors looking for the top gaming stocks to buy.
It’s an exciting time to be a gamer. Furthermore, if you have a nose for value, an investor in the video-game stocks.
The next few years could be met with higher development costs. However, I do think the long-term trajectory remains impressive as the industry grows and creativity goes into overdrive. Perhaps there will even be a bit of AI augmentation.
In the meantime, the gaming industry seems to be in cutback mode, with two notable gaming companies recently slashing jobs. If you’re willing to stick around for the near-term slog for the potential long-term growth, the gamers are worth pursuing as they stand.
Here are three gaming stocks that I believe are too cheap, likely because they lack near-term catalysts. However, as new tech and next-generation titles are released over the next 5-10 years, I view the following plays as outstanding plays for patient, long-term investors seeking growth and value.
Take-Two Interactive (TTWO)
Take-Two Interactive (NASDAQ:TTWO) is one of the gaming companies that has laid off staff in recent weeks. The firm behind such franchises as Grand Theft Auto (GTA) reportedly cut around 5% of the workforce. There is a bit of uncertainty clouding the release timeline for GTA VI, a hotly-anticipated title that’s behind schedule. There is also a bit of weakness in mobile gaming. As a result, many nearsighted traders may have already ditched the stock.
There’s no question that GTA VI is one of those blockbuster catalysts that could power TTWO stock. The game, which was initially poised for a 2025 release, may be pushed to 2026. That’s a long time to wait as a trader looking to make quick profits.
That said, if you’ve got a three-year horizon, the stock looks like a contrarian buy. This is true now that the GTA delay news is priced. Whether it launches in 2026 or, the game will probably be worth the wait. Citi analyst Jason Bazinet, who recently upgraded TTWO stock to Buy from Hold, certainly seems to think so.
At writing, shares are down more than 31% from their high. While the year ahead could continue to be choppy, I continue to pound the table on the long-term narrative. This may very well be the best in the entire industry because of GTA VI.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the behemoth behind the Xbox console and Game Pass subscription service. Lately, Xbox has been making some questionable and arguably controversial moves.
Whether we’re talking about the recent closure of a handful of game studios or the decision to launch four first-party Xbox titles on competing consoles, it’s clear the Xbox division isn’t afraid of making drastic, potentially risky moves to restructure itself.
With Xbox Game Pass subscriber growth slowing, questions linger as to where the Xbox console will be headed next as it begins opening up its ecosystem a bit. Perhaps such a move marks the firm’s openness to a peaceful end to the “console war” with rivals like Sony (NYSE:SONY) PlayStation. Expanding a video game’s audience base just makes sense, especially given that many Xbox owners are unlikely to buy a PlayStation (and vice versa) solely to play exclusive games.
Further, with Xbox ready to launch a mobile game store this July, it will be interesting to see how much of a jolt it can get as it looks to win the business of smartphone gamers. In any case, I think Microsoft is poised to move more toward a services route from here, especially if Xbox Cloud Gaming can advance from beta.
In short, Xbox Game Pass is the future, in my opinion. You will find that this is true regardless of which platform (console, mobile, or cloud) gamers choose. This makes MSFT one of the top gaming stocks to buy.
Sony (SONY)
Sony is a top rival to Microsoft in the gaming scene with its PlayStation console. With Xbox poised to release some formerly exclusive titles to PlayStation, it certainly seems like it makes more sense to buy PlayStation 5 over Xbox Series X or S console. Indeed, accessibility to titles is a major contributing factor to the age-old question of PlayStation or Xbox.
With Sony recently announcing a dual-CEO structure for its video gaming division (Sony Interactive Entertainment), it certainly seems like Sony is ready for big restructural moves of its own.
Moving ahead, I wouldn’t be surprised if Sony made further gaming acquisitions. The gaming scene looks ripe for consolidation as studios feel pressure to cut costs. Sony’s prior $3.6 billion purchase Bungie made two years ago was a wise, albeit unexpected, move. The Japanese conglomerate has deep enough pockets and enough financial firepower to make more such deals. If you are looking for gaming stocks to buy, start here.
On the date of publication, Joey Frenette held shares of Microsoft. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
