Ride the Metaverse Boom With These 4 Stocks
Here we discuss four stocks -- Meta Platforms (FB), NVIDIA (NVDA), Microsoft (MSFT) and Shopify (SHOP) -- which are well-poised to benefit from the metaverse boom.
Metaverse has been the buzzword this year. Facebook’s rebranding as Meta Platforms FB -- which reflected its focus on developing a footprint in this space -- has attracted a lot of enterprises into this burgeoning space.
The term metaverse can be found in Snow Crash, Neal Stephenson’s 1992 science fiction novel. It refers to a convergence of physical, augmented and virtual reality (AR/VR) in a shared online space in layman terms. The metaverse is expected to be the future of work and play and an increasingly common aspect of daily lives.
Per Meta, the metaverse is a set of virtual spaces where a user can create and explore with other people who aren’t in the same physical space. However, the social-networking giant believes that a single company can't develop metaverse-related products. Many of these products are likely to take 10-15 years to achieve full potential.
Apart from AR/VR, digital payments, cryptocurrencies and non-fungible tokens (NFT) are important components of metaverse that can be used to run its economy.
Per a report from Bloomberg Intelligence, revenue prospects of the metaverse space can reach $800 billion by 2024. This presents a significant growth opportunity for social networking companies, online game makers, digital payment processors, blockchain technology providers and cryptocurrency miners.
Here we discuss four stocks that are well poised to benefit from the metaverse boom.
NVIDIA NVDA, a Zacks Rank #2 (Buy) company, is riding on strong demand for its graphics processing units (GPUs). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVIDIA’s GPUs and advanced chips are essential for running highly complex algorithms and boosting computing power, essential for the metaverse to work.
NVIDIA’s Omniverse is also noteworthy in this regard. Powered by its RTX technology, Omniverse provides a shared platform on which live collaborations take place between users and applications with real-time speed and simulated reality.
NVIDIA Corporation Price and Consensus
While NVIDIA will provide the computing power, Microsoft MSFT aims to become the go-to-work software provider in the metaverse.
This Zacks Rank #3 (Hold) company unveiled Mesh for Microsoft Teams in November, which will be launched in 2022. The application can be regarded as a gateway to the metaverse and used in a standard laptop or smartphone.
Microsoft Dynamics 365 Connected Spaces will allow companies to recreate and visit their work factory floors or retail stores during virtual meetings. This is expected to boost collaboration, troubleshoot and directly interact with their product spaces.
Furthermore, Microsoft’s Xbox gaming system can be used to provide users access to the metaverse.
Microsoft Corporation Price and Consensus
The economic aspect of the metaverse is hard to ignore and e-commerce providers are expected to play an important role in developing this. Another Zacks Rank #3 stock Shopify SHOP, is well-poised to benefit from this trend.
Shopify, which primarily helps small and medium businesses develop websites and conduct business online, has expanded its offerings to NFTs. Merchants can now use Shopify’s NFT platform to mint and sell their own branded NFTs using Shopify and Shopify Payments right from their store.
The acquisition of AR provider Primer strengthened Shopify’s offerings for the metaverse. Primer helps users visualize what tile, wallpaper or paint will look like on surfaces inside their homes.
Any discussion about metaverse remains incomplete without Facebook-parent Meta. The company’s metaverse ambitions are well known. CEO Mark Zuckerberg has expressed enthusiasm about developing products and services that will bring an interconnected set of experiences for its users globally.
This Zacks Rank #3 company has been investing $50 million over two years on metaverse initiatives through its recently introduced XR Programs and Research Fund. Through this program, Meta will collaborate with industry partners, civil rights groups, governments, non-profit organizations and academic institutions to develop technologies to build the metaverse.
Meta Platforms, Inc. Price and Consensus
Facebook’s experience building AR devices like Quest headset is expected to provide it a first mover’s advantage in developing technologies essential for building the metaverse.
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