In this article, we take a look at 10 most promising metaverse stocks to buy.
The metaverse is a potential growth market in technology.
Given it’s new and unproven, it is uncertain how big it will be.
One company, Meta Platforms, Inc. (NASDAQ:META), has invested tens of billions into trying to make it a reality.
According to the company in November of 2022, 80% of Meta Platforms, Inc. (NASDAQ:META)’s investments goes to its core social media business and slightly less than 20% goes into the company’s Reality Labs segment, which houses its metaverse efforts.
Meta Platforms, Inc. (NASDAQ:META) CEO Mark Zuckerberg explained the reasoning behind the huge investment, “We’re not going to be here in the 2030s communicating and using computing devices that are exactly the same as what we have today. If someone has to build that and invest in it and believe in it, there’s a lot of new technology that needs to get invented to create that. So I’m still very optimistic about that.”
Zuckerberg also said of the metaverse, “Metaverse isn’t a thing a company builds. It’s the next chapter of the internet overall.”
Given the technology to power a metaverse isn’t fully developed yet, the current metaverse products aren’t that great.
Meta Platforms, Inc. (NASDAQ:META) has lost a lot of money as a result of its investments. The company, nevertheless, plans to invest at least tens of billions more into the effort.
The big investments in the metaverse also mean more business for other companies as well.
To power the metaverse, companies will need processing power. For avatars and games, some companies may made need licensing. Once built, gaming and e-commerce could be big future segments in the metaverse.
Because the technology to create a compelling metaverse hasn’t been invented yet, it’s not clear how big it could be. If Zuckerberg is right on the metaverse, the market could be considerable.
If the future metaverse isn’t as compelling for various reasons, on the other hand, it might not be a big market. If the only way to access the metaverse is through augmented reality (AR) and virtual reality (VR) headsets for instance, and not many people want to wear a headset, the market might not be very big.
Given the uncertainty, it might be a good idea for long term investors to own leading profitable blue chip technology stocks that have additional growth potential in the metaverse. Because the metaverse is uncertain, it could be also be a good idea for long term investors to own a well diversified portfolio of leading stocks across many different sectors.
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Methodology
For our list of 10 Most Promising Metaverse Stocks to Buy, we chose 10 blue chip technology stocks with competitive advantages that have future growth potential from the metaverse.
We sorted the stocks based on the number of hedge funds in our database of 943 funds that held shares in the same stock at the end of Q4.
For those of you interested, check out 10 High Growth AI Stocks to Buy.
10 Most Promising Metaverse Stocks to Buy
10. Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 46
Electronic Arts Inc. (NASDAQ:EA) is a leading video game maker that could realize more demand as the metaverse grows given gaming could be one of the biggest markets in the metaverse in the future. With fairly realistic graphics in the metaverse, it could be possible to play games in a whole new way that could add more value to Electronic Arts Inc. (NASDAQ:EA)’s products.
For the fiscal quarter ended December 31, 2022, or Q3 FY23, Electronic Arts Inc. (NASDAQ:EA) had total net revenue of $1.881 billion and net income of $204 million. Diluted earnings per share was $0.73 and the company repurchased $325 million worth of shares.
Alongside Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Electronic Arts Inc. (NASDAQ:EA) is a metaverse stock that many hedge funds in our database owned at the end of Q4.
9. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 59
ASML Holding N.V. (NASDAQ:ASML) is a leader in semiconducting producing equipment. To build the metaverse, some companies like Meta Platforms, Inc. (NASDAQ:META) will have to spend a lot of capital that will increase the demand for semiconductors. If the metaverse is a success, processing demand and demand for semiconductors will also increase.
Given ASML Holding N.V. (NASDAQ:ASML) is currently the leader in an essential part of the semiconductor equipment industry, it stands to benefit from the potential growth.
The New York Times describes ASML Holding N.V. (NASDAQ:ASML)’s importance in 2021, “The machine is made by ASML Holding, based in Veldhoven. Its system uses a different kind of light to define ultrasmall circuitry on chips, packing more performance into the small slices of silicon. The tool, which took decades to develop and was introduced for high-volume manufacturing in 2017, costs more than $150 million. Shipping it to customers requires 40 shipping containers, 20 trucks and three Boeing 747s. The complex machine is widely acknowledged as necessary for making the most advanced chips, an ability with geopolitical implications.”
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 97
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a leading semiconductor company that could benefit from the metaverse by potentially realizing more demand for its semiconductors. Companies like Meta Platforms, Inc. (NASDAQ:META) already use Advanced Micro Devices, Inc. (NASDAQ:AMD) semiconductors for some of their data center processing needs, and demand could increase in the future if the metaverse expands.
Nevertheless, Advanced Micro Devices, Inc. (NASDAQ:AMD) is riskier than some of the other stocks on our list given big tech companies can make their own semiconductor chips to save money. Advanced Micro Devices, Inc. (NASDAQ:AMD) also has a forward P/E ratio of 18.83 which indicates that the market expects a lot of growth in the future. If the company misses growth expectations, Advanced Micro Devices, Inc. (NASDAQ:AMD) could underperform.
Of the 943 hedge funds in our database, 97 owned shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) at the end of Q4, ranking the stock #8 on our list of 10 Most Promising Metaverse Stocks to Buy.
7. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 99
The Walt Disney Company (NYSE:DIS) is an entertainment conglomerate that has metaverse growth potential given it owns many valuable entertainment franchises such as the Marvel Entertainment and Star Wars that it can make games or create valuable experiences from. The Walt Disney Company (NYSE:DIS) also has a leading streaming service, Disney+, which already gives the company a huge online userbase to offer potential services to in the future. 99 hedge funds in our database owned shares of The Walt Disney Company (NYSE:DIS) at the end of Q4, making it one of the more widely held entertainment stocks in our database.
6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 106
NVIDIA Corporation (NASDAQ:NVDA) ranks #6 on our list of 10 Most Promising Metaverse Stocks to Buy given 106 hedge funds owned shares of the company at the end of Q4. Like Advanced Micro Devices, Inc. (NASDAQ:AMD), NVIDIA Corporation (NASDAQ:NVDA) benefits from the metaverse with potentially more demand for its GPUs. If the metaverse grows, demand for the company’s GPUs could grow assuming the company can maintain its technological lead for the semiconductors.
Although NVIDIA Corporation (NASDAQ:NVDA) has growth potential, it also faces a challenge in case big tech companies decide to make their own semiconductors in large quantities. As a result, NVIDIA Corporation (NASDAQ:NVDA) will need to continue to innovate to keep growing and the stock could be riskier than the non-semiconductor stocks in our list.
For fiscal 2023 which is the trailing twelve months ended January 29, 2023, the company’s sales were $26.97 billion, flat from a year ago. Adjusted EPS were $3.34, down 25% from a year ago. In the year, the company returned $10.44 billion in combined share repurchases and cash dividends for shareholders.
Like NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are metaverse stocks that many hedge funds in our database owned at the end of Q4.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) ranks #5 on our list of 10 Most Promising Metaverse Stocks to Buy given 135 hedge funds in our database owned shares of the tech giant at the end of Q4. According to Bloomberg in 2022, Apple is working on making a virtual reality/augmented reality (VR/AR) headset and potentially a 3D mixed reality world based on posted job listings. In terms of its price, the headset could cost $2,000 to $3,000 which would be significantly more expensive than Apple Inc. (NASDAQ:AAPL)’s iPhones. Nevertheless, the price could decline over time if there is enough demand. If successful, the metaverse could help Apple Inc. (NASDAQ:AAPL) potentially increase its services sales and also help diversify from the iPhone which accounted for 56% of the tech giant’s total sales in the first quarter of fiscal 2023.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
Alphabet Inc. (NASDAQ:GOOG) is a tech giant that owns the third largest cloud computing platform which could help power some future metaverse companies in the future. Alphabet Inc. (NASDAQ:GOOG) has also worked on an AR product, Google Glasses, in the past that wasn’t a success but that has nevertheless given the company experience. Given the metaverse’s potential, the tech giant is continuing to work on VR and AR products which could potentially help diversify its sales from search in the long term. Given its huge userbase in Android, search, and YouTube, Alphabet Inc. (NASDAQ:GOOG) can also easily market new metaverse products at relatively low cost.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 194
Meta Platforms, Inc. (NASDAQ:META) is a metaverse company given it has invested tens of billions into building various future metaverse products. According to Insider in October 2022, Meta Platforms, Inc. (NASDAQ:META) has invested $36 billion into its Reality Labs division since 2019 and the company plans to invest a “significant amount” of more money into building the metaverse over the next three to five years. Although its current metaverse products still lose money, Meta Platforms, Inc. (NASDAQ:META) has potential in the long term given its huge userbase and world class engineering talent. 194 hedge funds in our database owned shares of Meta Platforms, Inc. (NASDAQ:META) at the end of Q4, ranking the stock #3 on our list of 10 Most Promising Metaverse Stocks to Buy.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
Amazon.com, Inc. (NASDAQ:AMZN) is potentially well positioned to benefit from the growth of the metaverse given it owns the leading cloud computing platform in Amazon Web Services which could help power some metaverse apps in the future. Considering it is also the leading e-commerce company in the United States, Amazon.com, Inc. (NASDAQ:AMZN) could also potentially realize more e-commerce sales from a future metaverse. Amazon.com, Inc. (NASDAQ:AMZN) also has potential in terms of making metaverse games given its gaming divison.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 10 Most Promising Metaverse Stocks to Buy given 259 hedge funds in our database owned shares of the tech company at the end of Q4. Microsoft Corporation (NASDAQ:MSFT) already has a mixed reality headset called the HoloLens on the market and the company also has the second largest cloud computing platform which could help power a future metaverse. Microsoft Corporation (NASDAQ:MSFT) has a forward P/E ratio of 23.77 and a dividend yield of 1.07% as of March 4.
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Disclosure: None. 10 Most Promising Metaverse Stocks to Buy is originally published on Insider Monkey.
