Several tech giants are betting that the metaverse could prove to be the next hot trend in technology.
It is widely believed that the Metaverse is the next evolution of the internet, allowing people to experience the internet in 3D. Unsurprisingly, the metaverse is expected to touch multiple sectors ranging from online education to gaming to social interactions and commerce.
This explains why Goldman Sachs sees the metaverse generating an $8 trillion long-term revenue opportunity for its participants. Amazon (AMZN -0.22%) and NVIDIA (NVDA 2.67%) are two tech giants that could capitalize on this tremendous opportunity. Let’s see how.
1.Amazon
The e-commerce market is expected to be one of the main beneficiaries of the metaverse. TechNavio estimates that Metaverse could grow 36% annually in the e-commerce market through 2026 and generate $60 billion in additional revenue over the forecast period. North America is expected to capture a 38% share of the Metaverse-based e-commerce market by 2026.
The spread of the metaverse in e-commerce could add another dimension to Amazon’s growth given the company’s position in the North American and global e-commerce markets. For example, Amazon captured 56% of the US e-commerce market in 2021. Its global share was 13% in 2020.
Amazon was poised to seize this opportunity even before the Metaverse became a thing. In 2017, the e-commerce and cloud computing giant launched an augmented reality (AR) enabled iOS app called AR View. The app allowed consumers to visualize what items like furniture would look like in a room. The company updated this app in 2020, giving consumers the ability to place multiple items in a room using the Room Decorator tool.
This year, the company has given its AR tool another upgrade with the launch of Amazon View. Consumers can now get a 3D layout of their home on their smartphone and customize it with exact measurements of the furniture they might want to buy. Customers looking for interior design inspiration can also get a quick estimate using Amazon View.
Of course, this technology has been around for a while, but Amazon is focused on refining it, and its solid share of the e-commerce market puts the company in a good position to capitalize on the metaverse. However, this is just one way Amazon is well on its way to winning in the Metaverse.
The cloud computing market could be another beneficiary of the introduction of metaverse. That’s because hosting the 3D virtual worlds that form the basis of the metaverse will require a lot of computing power to serve multiple users in real time. Other cloud services like analytics, machine learning, and storage should also see a surge in demand.
With Amazon controlling 34% of the cloud infrastructure market as of Q2 2022, and a larger share than the next two providers combined, demand for its cloud services should ideally boom as metaverse adoption gains momentum.
All of this suggests that Amazon could prove to be a top metaverse pick over the long term, with the emerging tech trend complementing the solid growth it’s seeing in other niches. So don’t be surprised if Amazon’s earnings grow faster than analyst estimates of 33% annual growth over the next five years.
2. NVIDIA
Nvidia’s expertise in graphics cards enables it to take advantage of the Metaverse possibilities. The company began capitalizing on this opening with its Omniverse platform, which supports 3D designs, virtual avatars, and digital twins, which are 3D virtual representations of physical objects in the real world.
Nvidia CFO Colette Kress noted on her August earnings call that the chipmaker “announced advancements in several foundational technologies of the metaverse, defined as the 3D version of the internet.” The company’s “Omniverse Avatar Cloud Engine” will enable companies to create and deploy assistants and avatars, transforming interactions across a range of industries.”
Nvidia has also released solutions that “should help automate the creation of virtual worlds” using artificial intelligence and graphics cards. It’s worth noting that Nvidia’s Metaverse-specific solutions are already gaining traction among customers. Siemens and Nvidia announced a partnership in June 2022 to accelerate the adoption of digital twins in the industrial niche. PepsiCo is another company using Nvidia’s Omniverse digital twins to improve the efficiency of its operations.
Partnerships like this put Nvidia on the right track to capitalize on a rapidly growing opportunity. The demand for digital twins is increasing rapidly as they contribute to productivity and process improvements and play an important role in the industrial Internet of Things. Mordor Intelligence estimates that the digital twin market could grow at 34% annually through 2027.
Nvidia’s Omniverse ecosystem continues to expand with the addition of third-party developers in various industries such as robotics, 3D design, and industrial automation. It won’t come as a surprise if the company becomes a major player in this fast-growing market.
On the other hand, Nvidia’s graphics cards also power supercomputers that are supposed to enable the Metaverse. So the semiconductor giant is on course to take advantage of both the hardware and software sides of the metaverse. The tremendous opportunity this market presents means it could become a monster metaverse game in the long run.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Goldman Sachs, and Nvidia. The Motley Fool has a disclosure policy.
