I’ve been looking at potential metaverse stocks recently as there’s a lot of excitement about this sector right now. It could be the start of a new age, just as when the internet exploded at the turn of this century.
I think the potential is huge for the metaverse, or a fully digital world. This won’t be just for gaming, but for remote working and the wider entertainment sector too. With this in mind, there will be many opportunities for me to buy metaverse stocks. Here are a few I’ve been looking at.
What’s all the excitement about?
The buzz kicked up a gear in October when Meta (previously Facebook) said it would focus on bringing the metaverse to life. Meta is the first company I’d consider for my portfolio as I look to increase exposure to this sector. It says the metaverse will unlock new opportunities, and will “help people connect, find communities and grow businesses”.
The potential for video gaming is already well known due to augmented reality/virtual reality (AR/VR) technology. However, a metaverse has the potential to take this further by extending the real world into a digital counterpart. Users will have their own avatar (a digital version of themselves) that will be able to attend meetings, virtual events, and interact with others, all from their own homes.
I view the recent work-from-home culture as another catalyst for the growing metaverse. Companies like Zoom benefited from video meetings during the pandemic. I don’t think it’ll be long before employees (represented by avatars) are attending meetings virtually.
VR headsets will be critical for the metaverse. According to IDC, the forecast for the five-year compound growth rate in VR headset shipments is 41.4%. Meta is leading this charge with its Oculus brand of headsets.
Top metaverse stocks
There are other companies that I think will benefit from a growing digital world. The first is Nvidia, an advanced computer chip designer that focuses on graphics processing units (or GPUs). The company is building an Omniverse platform of its own. But beyond the Omniverse, Nvidia’s GPUs are going to be required to run the advanced graphics in any metaverse.
The next company is Roblox. It’s a development platform that allows its users to create their own online games and applications for others to use and play. The company is expanding its platform capabilities into the metaverse, and has partnered with some big brands to do so.
For example, Nike has used Roblox’s platform to create Nikeland. This is a virtual world dedicated to the brand that includes mini-games, and even a showroom where fans can get digital versions of Nike’s products for their avatars. There is huge potential here, in my view. More companies like Nike can leverage Roblox’s expertise and bring their brands into the metaverse.
I really do think the metaverse will offer significant opportunities for my portfolio. There are always risks to consider though, and there’s no guarantee Nvidia, Meta, or Roblox will be successful. It will take significant investment for these companies to keep innovating in this expanding sector. Were I a risk-averse investor, I might be better suited to investing in a technology-based ETF to diversify my exposure to any potential metaverse. Nevertheless, I’m excited by the prospects for these companies. They’re buys for my portfolio.
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Dan Appleby owns shares of Meta and Nvidia. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Zoom Video Communications. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.