It’s Time: 5 Metaverse Stocks Every Investor Needs To Consider in 2022 was written by Theresa Bedford and originally appeared on In The Game Investing. It has been republished with permission.
Despite ongoing media coverage of Meta, the parent company of Facebook, a recent survey from Hub found that 46% of respondents didn’t know about the metaverse. Another 33% only heard “something” about it. And, of those who had heard of it, nearly 70% weren’t very confident in describing it.
The metaverse shouldn’t come as a surprise. We live in a world filled with artificial intelligence, digital technologies, and faster networks destined to be connected on another level. Like it or not the metaverse is the future. Now is the time to get started.
What Are Metaverse Stocks?
The metaverse is a three-dimensional virtual reality where users connect and experience an augmented, virtual, and physical reality simultaneously. With the combination of virtual interactions, physical objects, and digital transactions, the lines between life as we know it and a digital world are blurred.
According to a Bloomberg analysis, the metaverse market could grow to nearly $800 billion by 2024. Metaverse stocks develop technology to design the environment and allow users to connect. Here are five metaverse-related stocks that investors need to consider in 2022:
1. Microsoft (MSFT)
Last month Microsoft announced a $69 billion deal to acquire Activision Blizzard, a gaming company “poised to provide building blocks for the metaverse.” Interactive entertaining and gaming are among the fastest-growing entertainment forms of today.
Microsoft is a solid company with a proven track record. Its revenue continues to rise with healthy operating margins–easily beating analysts’ expectations quarter after quarter. The business is innovative and growing from developments including server products, cloud services, an augmented reality platform (Mesh), and software.
2. Apple (AAPL)
Although not directly working in the metaverse space, Apple is a solid company with a proven track record. Apple CEO took to the stage during its Fiscal Year 2022; Quarter 1 earnings call to say that the company is “always exploring new and emerging technologies.”
Apple is a company with a loyal customer base and valued employees. Revenue is up $19.5 billion in 2021, with solid year-over-year growth. Time will tell where Apple will go next.
3. NVIDIA (NVDA)
Nvidia is a top graphic and video processing chips producer for high-end computing. It is poised to power the Metaverse with its chips that power artificial intelligence for self-driving cars, car infotainment, and cloud gaming. Large data centers like Amazon Web Services also use Nvidia chips.
Although the stock is down nearly 30% to date, buy-and-hold investors still love Nvidia for its innovation, competitor outperformance, and repeated guidance for higher revenues quarter-after-quarter.
4. Qualcomm (QCOM)
Qualcomm is already poised to be a leader in the metaverse. The company creates semiconductors, 5G technology, and software. Qualcomm has partnered with Meta (Formerly known as Facebook) to bring a social virtual reality platform to life with a Quest headset called Horizon Worlds. Since its rollout a few months ago, its user base has grown to nearly 300,000.
Qualcomm is a stock to watch. The 5G chip builder for the iPhone has a strong record of earnings and growth—positioned to move into mobile gaming next.
5. Unity Software (U)
Unity Software is one of the two most popular 3D video game engines. Designers customize how players move and interact in the game’s virtual environment with Unity Software.
Unity Software delivers strong revenue growth and innovation. Although the stock is priced near all-time highs, it’s an excellent buy for the long term. The company will produce well into the future for gaming, film, models, and other applications.
Check out an exchange-traded fund (ETF) containing one or more of these stocks for a lower-risk investment option. For example, ETFs that mirror the S&P 500 and the Nasdaq Composite Index like Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF, Schwab S&P 500 Index Fund, Invesco QQQ ETF (QQQ) contain shares of Microsoft, Apple, Nvidia, and Qualcomm.
The Vanguard Total Stock Market ETF (VTI) contains all five of the stocks mentioned above: Apple, Microsoft, Nvidia, Qualcomm, and Unity Software, along with more than 4,000 other stocks with weighted market-capitalization averages. As a result, it’s a widely diversified portfolio of U.S. stocks ideal for buy-and-hold investors.
When buying shares of an ETF, be sure to look for ones with low expense ratios and high liquidity (higher average trading volumes).
The Bottom Line
Investing is about innovation and growth–the future. So, expected earnings and productivity drive company valuations and investments. Early buy-and-hold investors in companies like Apple, Microsoft, Intel, among many others, have greatly profited over the acceleration of our digital networks–early investors in the Metaverse will do the same.
Now is the time to learn more about the metaverse and digital technology to make smart long-term investments for your future. Although tech giants currently control the area, more is to come with blockchain-based games and decentralized applications.
At the time of this writing, Theresa Bedford has long positions in Apple (AAPL), Microsoft (MSFT), and the Vanguard S&P 500 ETF (VOO) but holds no other positions in the stocks or ETFs mentioned.