In this piece, we will take a look at the thirteen best video game stocks to buy now.
The advent and growth of consumer technology and gadgets have revolutionized entertainment. Before the computer or gaming consoles became popular or advanced, entertainment means were limited primarily to physical or contact sports. Now, advanced gaming consoles, personal computers, and gadgets offer consumers new and immersive entertainment mediums.
This growth has also led to optimistic estimates for the video game industry. For instance, a research report from Markets Research Future estimates that the gaming market will grow at a strong compounded annual growth rate (CAGR) of 13% to be worth a staggering $547 billion by the end of 2030. Another report from KBV Research estimates that the market will grow at a similar CAGR of 12% to sit at $413 billion by 2028 end.
The report goes on to further outline that this growth will be driven by the uptick in internet and cellular connections and government initiatives for projects such as smart cities. It further explains that not only did Asia Pacific drive the gaming industry in 2021, particularly due to strong Chinese spending in the aftermath of the coronavirus pandemic, but the region will also continue to drive this growth into the future.
Finally, gaming companies themselves are evolving with time, as the traditional brick and mortar model that led to physical game disk sales is being replaced by an online model. This model removes the cost of manufacturing and printing disk drives for video games and lets the game developers directly provide their products to their customers – a process that allows them to improve their gross margins by reducing the cost of products sold.
With these details in mind, let’s take a look at some of the hot gaming stocks right now, and some companies likely to catch your eye include Advanced Micro Devices, Inc. (NASDAQ:AMD), Activision Blizzard, Inc. (NASDAQ:ATVI), and Microsoft Corporation (NASDAQ:MSFT).
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Our Methodology
In order to pick the top video game companies in the industry, we took a broad look at the different companies operating and then sifted out the relevant ones based on a variety of factors such as the quality of video game titles in their portfolio, relevant market events, and financial performance. The companies were then ranked according to Insider Monkey’s survey of 895 hedge funds for the second quarter of this year.
Best Video Game Stocks to Buy Now
13. Nintendo Co., Ltd. (OTCMKTS:NTDOF)
Number of Hedge Fund Holders: N/A
Nintendo Co., Ltd. (OTCMKTS:NTDOF) is a Japanese company that is one of the oldest gaming brands in the world. The company develops, manufactures, and sells gaming consoles and video game platforms. It was set up in 1889 and is based in Kyoto, Japan.
Nintendo Co., Ltd. (OTCMKTS:NTDOF) owns some of the most popular and mature gaming franchises in the world, such as the Super Mario Brothers, Mario Kart, and Legend of Zelda brands. These let the company refresh its franchises regularly, and provide it with the comfort of an established base that eagerly looks forward to new releases.
Nintendo Co., Ltd. (OTCMKTS:NTDOF) has sold close to a hundred million units of its Mario Kart franchise, and it also has devoted employees who work for an average of 14 years for the company. Its gaming console, the Switch, has sold 111 million units as of August 2022.
Along with Activision Blizzard, Inc. (NASDAQ:ATVI), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Microsoft Corporation (NASDAQ:MSFT), Nintendo Co., Ltd. (OTCMKTS:NTDOF) is a top video game stock.
12. Tencent Holdings Limited (OTCMKTS:TCEHY)
Number of Hedge Fund Holders: 2
Tencent Holdings Limited (OTCMKTS:TCEHY) is a Chinese holding company that develops and provides online video games alongside a host of other services and products. It is headquartered in Shenzhen, the People’s Republic of China.
Tencent Holdings Limited (OTCMKTS:TCEHY) is the world’s largest gaming company in terms of revenue, and China’s largest in terms of both revenue and the number of users in both PC and mobile games. Gaming represented 24% of Tencent Holdings Limited (OTCMKTS:TCEHY)’s Q2 2022 revenue, and the segment brought in $4.7 billion in net sales for the company.
With PwC forecasting a 36% growth rate for the gaming industry and a $326 billion valuation by 2026, Tencent Holdings Limited (OTCMKTS:TCEHY) has a large market at its disposal. As this year’s second quarter ended, two out of the 895 funds polled by Insider Monkey had owned the company’s shares.
11. SciPlay Corporation (NASDAQ:SCPL)
Number of Hedge Fund Holders: 25
SciPlay Corporation (NASDAQ:SCPL) is an American online gaming company that provides social video games for users to play over the Internet. These games include slots and casino games.
SciPlay Corporation (NASDAQ:SCPL)’s fourth quarter results saw the company grow its quarterly and annual sales by 5% alongside posting $365 million in net cash balance. This left the firm in a favorable position compared to earlier when it was financially struggling.
SciPlay Corporation (NASDAQ:SCPL) is also in the midst of purchasing a Turkish gaming company through which the firm aims to generate 10% revenue growth by the end of this year. Insider Monkey’s Q2 2022 survey of 895 hedge funds revealed that 25 had held a stake in the firm.
Out of these, Arnaud Ajdler’s Engine Capital is SciPlay Corporation (NASDAQ:SCPL)’s largest investor. It holds 1.7 million shares that are worth $25 million.
10. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 26
Sony Group Corporation (NYSE:SONY) is a Japanese consumer electronics firm that is known for designing and selling the PlayStation video game console. The firm is headquartered in Tokyo, Japan.
Sony Group Corporation (NYSE:SONY) has shipped a whopping 117 million units of its PlayStation 4 gaming console by March 2022, which was the last time that the firm shared the sales data. Its PlayStation 2 is the best selling video game console in history, as it has sold a whopping 155 million units worldwide in its lifetime.
In addition to selling gaming consoles, Sony Group Corporation (NYSE:SONY) also acquires video game development studios. This lets the company command a dominating position in the video game software side of the market as well, with games from Sony Group Corporation (NYSE:SONY)’s Horizon and Gran Turismo franchises ranking among the top ten games sold in the U.S. during 2022’s first quarter.
Insider Monkey’s June quarter of 2022 survey of 895 hedge funds revealed that 26 had bought Sony Group Corporation (NYSE:SONY)’s shares.
Mario Gabelli’s GAMCO Investors is Sony Group Corporation (NYSE:SONY)’s largest investor. It owns 1.7 million shares that are worth $146 million.
9. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 26
NetEase, Inc. (NASDAQ:NTES) is a Chinese company that provides online game services, develops and sells PC and mobile games, and licenses games from other developers. It is headquartered in Hangzhou, the People’s Republic of China.
NetEase, Inc. (NASDAQ:NTES) is expected to post strong results for its second fiscal quarter, via 13.3% revenue growth and 21% normalized earnings per share (EPS) growth. After the pause in Chinese video game approval was lifted in March 2022, NetEase, Inc. (NASDAQ:NTES) announced in July 2022 that it will launch the highly anticipated Diablo Immortal franchise in the country.
Goldman Sachs estimates that this video game will earn annualized revenue of RMB.5.1 billion in China during its first year of release. NetEase, Inc. (NASDAQ:NTES) is also expanding its video game development to the U.S., and it has opened studios in Seattle and Austin. By the end of this year’s June quarter, 26 out of the 895 hedge funds polled by Insider Monkey had held NetEase, Inc. (NASDAQ:NTES)’s shares.
Out of these, William B. Gray’s Orbis Investment Management is NetEase, Inc. (NASDAQ:NTES)’s largest investor through a $342 million stake that comes via 3.6 million shares.
8. Sohu.com Limited (NASDAQ:SOHU)
Number of Hedge Fund Holders: 32
Sohu.com Limited (NASDAQ:SOHU) is a Chinese company that develops, operates, and licenses online video games for personal computing and mobile devices. It is headquartered in Beijing, China.
Sohu.com Limited (NASDAQ:SOHU) has one of the strongest balance sheets in the video gaming industry since it has a whopping $1.4 billion of cash under its belt and no debt. The firm’s gaming segment represents 85% of its overall revenue, and even during this year’s first quarter when the entire Chinese industry was in a downturn, Sohu.com Limited (NASDAQ:SOHU) posted $3 million in net income.
Sohu.com Limited (NASDAQ:SOHU) is expected to rake in $747 million, $759 million, and $754 million in revenue according to analysts for 2022, 2023, and 2024. Insider Monkey studied 895 hedge fund portfolios for Q2 2022 to discover that 32 had held a stake in the company.
Sohu.com Limited (NASDAQ:SOHU)’s largest investor is Jim Simons’s Renaissance Technologies which owns 1.8 million shares that are worth $30 million.
7. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 38
Roblox Corporation (NYSE:RBLX) operates and provides an online platform that allows its users to explore fictional worlds in 3D, and developers to develop and publish games. The firm is headquartered in San Mateo, California.
Roblox Corporation (NYSE:RBLX) is one of the most development oriented companies in the industry, and it often spends large amounts of time to finetune a product before launching it. Its platform saw explosive growth during the coronavirus pandemic, and the firm expects average hours spent daily by a user on its platform to strongly grow once again in September after dropping from the COVID peaks.
Roblox Corporation (NYSE:RBLX)’s latest quarter saw it report 52 million daily active users, for a 21% annual growth, and 11.3 billion hours engaged for a 16% annual growth. Out of the 895 hedge funds polled by Insider Monkey for their June quarter of 2022 portfolios, 38 had invested in the firm.
Roblox Corporation (NYSE:RBLX)’s largest investor is Jim Simons’s Renaissance Technologies which owns 11.5 million shares that are worth $380 million.
6. Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 46
Electronic Arts Inc. (NASDAQ:EA) is one of the most well known video game development companies in the world, and it is known for developing iconic titles such as FIFA, Need for Speed, Star Wars, and The Sims. The firm is headquartered in Redwood City, California, United States.
Electronic Arts Inc. (NASDAQ:EA) surprised analysts and industry watchers with its latest quarterly report, as despite the ongoing inflationary storm, the company posted $311 million in net income for a massive 52% annual growth. During the same time period, the firm raked in $7 billion in revenue for 24% annual growth.
Bank of America named the firm its favorite video game stock in a recessionary scenario in September 2022, stating that “consumer staple” titles like FIFA are more likely to catch gamers’ attention in a recession as they stop spending on new titles. By the end of this year’s second quarter, 46 out of the 785 hedge funds studied by Insider Monkey had invested in the company.
Electronic Arts Inc. (NASDAQ:EA)’s largest investor in our database is Jim Simons’s Renaissance Technologies which owns 1.5 shares that are worth $182 million.
Electronic Arts Inc. (NASDAQ:EA) is met by Activision Blizzard, Inc. (NASDAQ:ATVI), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Microsoft Corporation (NASDAQ:MSFT) in our list of best video game stocks.
5. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 66
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is an American company with a host of development studios in its portfolio. These are responsible for some very popular games, such as the Grand Theft Auto lineup developed by Rockstar Games. The company is headquartered in New York, New York.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the strongest candidate to successfully develop a metaverse, due to its existing game lineup offering a great platform for metaverse expansion. The company’s RP modification for the GTA franchise is already taking the first step in this direction, and GTA V, despite being a decade old, has sold close to 170 million units worldwide.
Goldman Sachs increased Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s share price target to $165 from $131 in October 2022, as it stated that headwinds are already priced into the stock. Insider Monkey took a look at 895 hedge fund portfolios for their Q2 2022 holdings and discovered that 66 had held a stake in Take-Two Interactive Software, Inc. (NASDAQ:TTWO).
Out of these, Andreas Halvorsen’s Viking Global is Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s largest investor. It owns 1.9 million shares that are worth $245 million.
4. Activision Blizzard, Inc. (NASDAQ:ATVI)
Number of Hedge Fund Holders: 84
Activision Blizzard, Inc. (NASDAQ:ATVI) is a video game company that develops and sells games through its Activision, Blizzard, and King franchises. The firm develops video games for personal computers, gaming consoles, and mobiles. It is headquartered in Santa Monica, California.
Activision Blizzard, Inc. (NASDAQ:ATVI)’s Call of Duty gaming title is one of the most popular titles in the world, and it takes the third place for the most sales after Super Mario and Tetris through having sold a whopping 425 units in its lifetime. Over the course of its lifetime, Call of Duty has raked in Activision Blizzard, Inc. (NASDAQ:ATVI) a cool $30 billion in sales.
Activision Blizzard, Inc. (NASDAQ:ATVI) is currently in the process of being acquired by Microsoft Corporation (NASDAQ:MSFT), and the deal is under intense regulatory scrutiny due to fears that Microsoft might limit Call of Duty to the Xbox and prevent PlayStation users from playing the game. Insider Monkey’s June quarter of 2022 survey of 895 hedge funds revealed that 84 had invested in Activision Blizzard, Inc. (NASDAQ:ATVI).
Activision Blizzard, Inc. (NASDAQ:ATVI)’s largest investor is Warren Buffett’s Berkshire Hathaway which owns 68 million shares that are worth $5.3 billion.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation (NASDAQ:NVDA) is one of the largest semiconductor firms in the world, and it designs and sells graphics processing units that are used by gamers to run heavy duty games. The company is headquartered in Santa Clara, California, the United States.
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs lead the market when it comes to discrete units. These are standalone products that are vastly more powerful than the dedicated GPUs that come alongside processors, and they are used by all gamers and content makers due to their processing capabilities. During Q1 2022, NVIDIA Corporation (NASDAQ:NVDA) held a 21% share of this market, higher than its primary rival in the space, AMD.
NVIDIA Corporation (NASDAQ:NVDA) also holds an 80% share of the PC gaming market, and its products also power the Nintendo Switch – one of the most popular handheld gaming consoles in history. 84 out of the 895 hedge funds polled by Insider Monkey during Q2 2022 had invested in the company.
NVIDIA Corporation (NASDAQ:NVDA)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 7.5 million shares that are worth $1.1 billion.
2. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 87
Advanced Micro Devices Inc. (NASDAQ:AMD) is an American semiconductor manufacturer and seller. Its graphics processing units (GPUs) are used by gamers to run video games on their personal computers, and the firm also sells processors and GPUs for gaming consoles such as Sony’s PlayStation.
Advanced Micro Devices Inc. (NASDAQ:AMD) became the latest chip company to suffer from a weakening personal computing environment, as it announced in October 2022 that it will miss revenue guidance for PC sales in its third quarter. However, the long term outlook for the company is still secular, simply due to the expected growth in global personal and enterprise computing trends, believes its chief executive officer Dr. Lisa Su.
To add credence to this fact, Advanced Micro Devices Inc. (NASDAQ:AMD)’s shares are currently trading at price to earnings ratio of 15x, which is significantly lower than historic ratios of 20x and 30x. Jefferies kept a $135 price target for the company in October 2022, as it stated that the revenue miss from PC is already reflected in AMD’s stock price due to year to date losses in the share price. By Q2 of 2022 end, 87 out of the 895 hedge funds polled by Insider Monkey had owned a stake in the company.
Advanced Micro Devices Inc. (NASDAQ:AMD)’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 25 million shares that are worth $1.9 billion.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is one of the largest technology companies in the world, and it is responsible for designing and selling the popular Xbox video game console and peripherals such as the HoloLens. The firm is headquartered in Redmond, Washington.
Microsoft Corporation (NASDAQ:MSFT) has one of the strongest portfolios in the technology industry, and it holds strong positions in the gaming, cloud computing, and productivity markets. The firm commanded 50% of the U.S. gaming market as of September 2022, and its Xbox One gaming platform has sold close to 59 million units in its lifetime.
Microsoft Corporation (NASDAQ:MSFT) is also currently in the process of acquiring Activision Blizzard, and if the deal goes through, then the firm will bring the highly popular Call of Duty platform under its wing. The deal will also provide Microsoft Corporation (NASDAQ:MSFT) with a strong video game development arm, which will complement its Xbox gaming console.
As this year’s second quarter ended, 258 out of the 895 hedge funds polled by Insider Monkey had bought Microsoft Corporation (NASDAQ:MSFT)’s shares.
Out of these, Ken Fisher’s Fisher Asset Management is Microsoft Corporation (NASDAQ:MSFT)’s largest investor. It owns 28 million shares that are worth $7.3 billion.
Diamond Hill Capital Management mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“The recent market environment has enabled us to initiate positions in some high-quality names that have sold off indiscriminately and are trading at prices we haven’t seen in quite some time. Microsoft Corporation (NASDAQ:MSFT) is one example. Microsoft’s stock price declined amid the broader selloff of technology companies. This presented an opportunity for us to purchase shares at an attractive discount to our estimate of the intrinsic value. We expect the business to continue generating strong revenue growth and benefiting from operating leverage. Microsoft’s cloud computing services business, Azure, is also generating robust growth, confirming its competitive positioning.”
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Disclosure: None. 13 Best Video Game Stocks to Buy Now is originally published on Insider Monkey.
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