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The hype surrounding virtual reality, augmented reality and other immersive technologies has steadily increased in recent years. Not surprisingly, investors want to capitalize on this trend by investing in companies that are reinventing how we interact and do business in the lucrative metaverse. Given these positive indicators, savvy investors should seriously consider some of the Metaverse growth stocks discussed in this article.
Growth stocks, particularly in the tech sector, took a massive hit in 2022, losing 30% of their value. The sell-off was about 10% higher than the broader market, a testament to the market’s risk-off sentiment. However, tech stocks have gotten off to an encouraging start since opening in January. One of the top tech exchange-traded funds in the Invesco QQQ ETF is up a whopping 12%, a scenario that bodes well for Metaverse growth stocks.
NVDA Nvidia $232.86 U Unity Software $29.61 MSFT Microsoft $249.22 ADSK Autodesk $192.53 RBLX Roblox $36.96 ADBE Adobe $320.54 AMZN Amazon $93.50 Nvidia (NVDA)
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The burgeoning metaverse is going to need a lot of hardware to power its virtual environments, and that’s where Nvidia’s (NASDAQ:Nvidia) (NASDAQ:Nvidia) robust graphics processing units (GPUs) come into play. Nvidia’s state-of-the-art GPUs will in all likelihood play a crucial role in the development of the novel concept, making it one of the Metaverse facilitators’ favorites.
The company has operated a remarkably stable business and has averaged sales growth of over 32% over the last five years. The success of its core business allows the tech giant to continue investing in new growth verticals, such as its Metaverse content creation platform called Omniverse.
The platform enables content creators, engineers, and designers to create custom 3D pipelines more efficiently than ever before. In addition, it has already attracted more than 700 companies worldwide and over 200,000 individuals. If you’re still not optimistic about Nvidia’s Metaverse prospects, take it from its CEO Jensen Huang, who predicts that the Metaverse could be much larger than the physical world.
Unity Software (U)
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Unity Software (NYSE:U) revolutionized the video game engine market, offering a comprehensive platform that brings together graphic design, sound, monetization and other necessary assets. With its user-friendly interface, it’s no wonder that Unity Software has achieved dominance in its niche, owning a 60% market share. Additionally, revenue growth has exceeded the 20 percent mark in recent years and has consistently delivered excellent results.
In an interview last year, Unity CEO John Riccitiello spoke about the importance of real-time 3D in the development of Metaverse experiences. AR and VR will no doubt play a crucial role in creating immersive Metaverse experiences utilizing Unity’s 3D tools. The company’s software suite is tailor-made for the Metaverse, making it one of the best pick and shovel games in the business.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) is one of the few companies with a multifaceted plan to dominate the metaverse market.
At last year’s Microsoft Build conference, the company assembled a panel of experts to discuss its Metaverse strategy. The popular business communication platform Teams was a big part of the discussion alongside Azure, HoloLens and Azure Percept Studio.
Microsoft recently brought Mesh, a collaborative virtual experience software, to the Teams platform. It effectively opened the doors for the workplace metaverse poised to become a massive sub-niche in the industry. In addition, the company is also developing the technology needed to maximize the experience with its mixed reality headset HoloLens.
Furthermore, the Metaverse and the cloud are inseparable, which should be Azure’s long-term growth ramp. Interestingly, during the conference the developers talked about the enormous potential of the industrial metaverse. They previewed Azure Percept, a combination of hardware and software services that could play an important role in production management and potentially save millions in operational costs.
Autodesk (ADSK)
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Autodesk (NASDAQ:ADSK) is a leader in the construction and engineering industry with its popular building information modeling solution called Revit. The platform has changed the way architects and engineers build, providing an intuitive 3D design tool to easily create models and visualize the plans for any project. Autodesk’s plugins allow users to overlay their designs with rich VR and AR renderings.
The incredible success of software services and the subscription model have helped greatly strengthen Autodesk’s fundamentals. Gross and EBITDA margins have grown remarkably by 91% and 11.7%, respectively, over the past five years. In addition, the revenue growth numbers were also excellent, with the company’s 5-year revenue growth coming in at a staggering 18.9%. As it continues to increase the immersiveness of its offerings, it will continue to be a force to be reckoned with in line with the development of the Metaverse space.
Roblox (RBLX)
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Roblox (NYSE:RBLX) is a popular Metaverse game and content creation platform for the development of online games and virtual experiences. The stock is relatively young as it was listed in March 2021. At the end of December 2021, the share rose by more than 80% from its initial listing price. However, a slowdown in its key growth metrics, overarching metaverse narratives, and weaknesses in the stock market led to a whopping 71% drop in its share price over the past year.
The good news for the platform, however, is that worrying post-pandemic narratives are beginning to reverse regarding its business. The company ended the fourth quarter with bookings totaling $899.4 million, a 17% increase over the same quarter last year. Additionally, the number of daily active users rose to an average of 58.8 million, up 19% from the same period last year.
Adobe (ADBE)
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Adobe (NASDAQ:ADBE) is a technology juggernaut and offers one of the most prolific software suites for content creators. It offers some of the most widely used software platforms used by over 23 million users worldwide.
Adobe intends to add more tools and enhance existing ones to take advantage of the burgeoning Metaverse space. For example, the popular Substance 3D tools have become the industry standard for creating realistic 3D objects. Additionally, it seeks to democratize 3D creation by developing a collaborative platform where users can freely design and share their ideas.
The company is also expanding its analytics platform with robust new tools for tracking consumer activity with brands, experiences and objects in the metaverse. Advertising in the Metaverse is going to be a huge market going forward, and Adobe’s proactive approach could pay off in the future.
Amazon (AMZN)
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As the fourth-largest tech company by market cap, one would imagine that Amazon (NASDAQ:AMZN) would have a lot to do with the metaverse concept. Although not a pure sector, it will benefit immensely from the proliferation of the industry.
Finally, Amazon Web Services (AWS) is second to none when it comes to cloud hosting, and the Metaverse will no doubt run in the cloud. So far, AWS has enjoyed stunning success, with analysts predicting the division will be worth over $3 trillion in the future.
Amazon’s role in the Metaverse doesn’t stop there, however. It previewed its gamified Metaverse platform called #AmazonMetaWorld in India last year. The goal was to effectively play the best of the platform’s universe and preview what could become of experiential shopping in the future.
At the time of publication, Muslim Farooque held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.
Muslim Farooque is an avid investor and an optimist at heart. A lifelong gamer and tech enthusiast, he has a particular affinity for analyzing tech stocks. Muslim holds a bachelor’s degree in Applied Accounting from Oxford Brookes University.
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