The cloud gaming market is set to experience significant growth in 2024. This is driven by advancements in technology, increased internet penetration, and the widespread adoption of 5G. The global cloud gaming market is projected to grow from approximately $1.72 billion in 2023 to around $28.91 billion by 2032. This reflects a compound annual growth rate (CAGR) of 36.8%. This backdrop forms my article of the best cloud gaming stocks to buy.
Firms are leveraging their extensive infrastructure and technological capabilities to offer high-quality gaming experiences. These companies are focusing on strategic partnerships and innovations to expand their market presence.
The United States and China are significant markets for cloud gaming. This is driven by robust internet infrastructure, a large gaming community, and extensive 5G deployments. The Asia-Pacific region, in particular, is expected to see substantial growth. This is due to increasing smartphone penetration and the availability of affordable high-speed internet.
So here are three of the best cloud gaming stocks for investors to consider
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is a leader in GPU technology. It offers the GeForce NOW cloud gaming service. This service high-quality gaming experiences across various devices.
The reason I’m bullish on NVDA is due to the potential expansion of a partnership between Microsoft (NASDAQ:MSFT) and NVIDIA. Now, GeForce NOW cloud gaming service could be integrated with Xbox Game Pass. Images from the Xbox PC app show titles with the text “Included with NVIDIA GeForce NOW.” This suggests that Game Pass subscribers may gain access to play compatible titles over the cloud using GeForce NOW. They would do so instead of using Xbox Cloud Gaming.
If the partnership goes further and integrates GeForce NOW with Game Pass on Xbox Series X|S consoles, it would be a significant development in the cloud gaming space.
Furthemore, the company’s revenue and earnings per share (EPS) are expected to grow significantly over the next few years. In 2024, the average revenue forecast is $122.88 billion. This represents a 101.70% increase from the previous year’s revenue of $60.92 billion. Meanwhile, Nvidia’s EPS is expected to increase by 131.52% in 2024, from $1.19 in the previous year to $2.76.
Microsoft (MSFT)
Microsoft’s (NASDAQ:MSFT) Xbox Cloud Gaming, part of the Xbox Game Pass Ultimate subscription, leverages its extensive gaming library and Azure cloud infrastructure. It does so to deliver a robust cloud gaming experience.
Aside from the speculation around deepening MSFT’s collaboration with NVDA, Microsoft has extended its cloud gaming service to Xbox Series X, Series S, and Xbox One consoles. This move allowed gamers to play more than 100 titles with their Xbox Game Pass Ultimate subscription. They could do so on these consoles via the cloud, even before installation.
The company’s decision to combine cloud gaming with its Xbox Game Pass Ultimate service at no extra cost strengthened its competitive position in the market.
Alphabet (GOOG, GOOGL)
Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) despite the termination of services like Google Stadia, Alphabet remains a potent force in cloud gaming. This is primarily through the dominance of its app store for mobile devices. As the proliferation of 5G and then 6G takes precedence, cloud gaming on mobile devices will continue to rise. Companies like Alphabet will be at the center of this trend.
Alphabet recently announced its financial results for the first quarter of 2024. The company reported a 15% year-on-year increase in total sales to $80.54 billion. The company’s revenue was driven by strong performance in its Google services. YouTube advertising revenue increased by 21% year-on-year to $8.09 billion. Google search-related sales increased by 14% to $46.16 billion. Finally, Google Cloud sales increased by 28% to $9.57 billion.
In addition to the positive financial results, Alphabet also announced its first-ever dividend of $0.20 per share and a share buyback worth up to $70 billion. The company’s CEO, Sundar Pichai, attributed the strong performance to Google’s leadership in AI research and infrastructure, as well as its global product reach. This then make it one of those best cloud gaming stocks to consider for the future.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
