In this article, we will take a look at the 11 best metaverse stocks to invest in. To see more such companies, go directly to 5 Best Metaverse Stocks To Invest In.
When Facebook renamed itself to Meta Platforms, Inc. (NASDAQ:META) in a dramatic pivot to the metaverse technology back in October 2021, who’d have thought that in a matter of just a year Meta Platforms, Inc. (NASDAQ:META) would be forced to rethink its priorities. Announcing the shift, Mark Zuckerberg at the time said in a letter:
“Our hope is that within the next decade, the metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce, and support jobs for millions of creators and developers.”
But a latest letter by Mark Zuckerberg paints a different picture. Meta Platforms, Inc. (NASDAQ:META), which recently announced huge layoffs and cost-cutting measures amid the challenging macro backdrop that is hammering ads business, seems not that excited about metaverse. The letter instead frequently mentioned AI. Here’s what Zuckerberg said in his March 2023 letter:
“Our single largest investment is in advancing AI and building it into every one of our products. We have the infrastructure to do this at unprecedented scale and I think the experiences it enables will be amazing. Our leading work building the metaverse and shaping the next generation of computing platforms also remains central to defining the future of social connection. And our apps are growing and continuing to connect almost half of the world’s population in new ways. This work is incredibly important and the stakes are high. The financial plan we’ve set out puts us in position to deliver it.”
The artificial intelligence mania ushered in after the launch of ChatGPT and the subsequent AI wars among major tech companies have jolted Meta Platforms, Inc. (NASDAQ:META) to its core. Some analysts even said the company might be “killing” metaverse projects to focus more on AI.
Is Metaverse Dead?
But does that mean metaverse has become irrelevant even before it reach actuality? The answer is a resounding no. Major companies, including Meta Platforms, Inc. (NASDAQ:META), are heavily investing in metaverse, which includes augmented reality, virtual reality, extended reality and even AI. Analysts believe the confluence of AI and metaverse in the future could create new opportunities.
The hullaballoo around AI shouldn’t let you think that metaverse is a relic of the past. In fact, spending in the sector is thriving.
Forrester recently surveyed 903 executives and found out that 46% of consumer brand marketers in the industry believe they will increase their metaverse budgets this year, while only 12% said they will spend less.
Metaverse companies like Roblox Corporation (NYSE:RBLX) are seeing huge spending from marketers because the interactive nature of metaverse apps really brings results for companies. A Wall Street Journal report mentions several examples of companies seeing success with metaverse apps for marketing. For example, the Japanese cosmetics company Shiseido Co. received 41.9 million visitors at a Roblox Corporation (NYSE:RBLX) experience called “Nars Color Quest” it sponsored between July to October 2022. In another example, consumers on average spent seven or eight minutes playing games on Drest, an app on which users can sample 3-D virtual fashions.
According to WSJ, Dina Fierro, senior vice president of the Web3 and metaverse group at Shiseido Americas, explained the effectiveness of metaverse applications for marketing in these words:
“When you think about seven or eight precious minutes with a consumer and how lucky you are to get maybe six seconds of someone’s attention on a platform like an Instagram or a TikTok, I think it’s very easy to validate the theory that this is a qualitative engagement.”
Photo by mahdis mousavi on Unsplash
Methodology
For this article we scanned Insider Monkey’s database of 943 hedge funds and picked 11 metaverse-related companies with the highest number of hedge fund investors. We selected companies that make metaverse-related software or hardware and have significant presence in metaverse, AR, VR and extended reality domains.
11. Himax Technologies, Inc. (NASDAQ:HIMX)
Number of Hedge Fund Holders: 11
Himax Technologies, Inc. (NASDAQ:HIMX) stands to gain from the metaverse boom in the future because the company makes an important component that is used in head mounted displays or headsets. This component is liquid crystal on silicon (LCoS) microdisplays. Himax Technologies, Inc. (NASDAQ:HIMX) last year also showed its 3D SLiM (Structured Light Module) solution for metaverse applications. This device has a 3D vision processor and depth camera offering real time high frame rate and high accuracy.
In its November 2022 investor presentation, Himax Technologies, Inc. (NASDAQ:HIMX) said:
“Himax owns exceptional Optics, 3D Sensing, WLO and WiseEye AI solutions with mass production records. The diverse non-driver solutions fulfill different AR/MR/XR/VR metaverse related application needs in AR Displaying & Human Interface Sensing.”
11 hedge funds tracked by Insider Monkey had stakes in Himax Technologies, Inc. (NASDAQ:HIMX) as of the end of the fourth quarter of 2022.
10. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 29
Online gaming platform Roblox Corporation (NYSE:RBLX) offers a highly developed metaverse where players can create virtual words, socialize with each other and even shop. As of the fourth quarter of 2022, Roblox Corporation (NYSE:RBLX) has a whopping 58.8 million average daily active users (DAUs), up 19% from the prior-year quarter.
In March, Jefferies analyst Andrew Uerkwitz upgraded the stock to Buy from Hold and increased his price target to $48. The analyst likes Roblox Corporation (NYSE:RBLX)’s new creator features and said he’s “comfortable” the company will be able to grow through competition and macro pressures.
As of the end of the fourth quarter of 2022, 29 hedge funds tracked by Insider Monkey had stakes in Roblox Corporation (NYSE:RBLX). The most notable hedge fund stakeholder of Roblox Corporation (NYSE:RBLX) was ARK Investment Management of Catherine D. Wood which had a $241 million stake in the company.
9. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 32
Unity Software Inc. (NYSE:U), the company behind one of the most powerful and widely used gaming engines in the world, stands to benefit from the metaverse revolution. In 2021 Unity Software Inc. (NYSE:U) announced that it will buy the technology division of WetaFX, which is behind Lord of the Rings and Game of Thrones movie and TV franchises, in a $1.6 billion deal. The plan was to boost Unity Software Inc. (NYSE:U)’s immersive, AR and VR capabilities. Unity’s technologies are used by developers to make metaverse applications.
Earlier this month, it was revealed that Cathie Wood bought over 200,000 shares of Unity Software Inc. (NYSE:U). ARK Investment Management already owns a $314 million stake in Unity Software Inc. (NYSE:U) as of the end of the fourth quarter of 2022. Overall, 32 hedge funds tracked by Insider Monkey have stakes in Unity Software Inc. (NYSE:U).
8. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 40
Chinese search engine giant Baidu, Inc. (NASDAQ:BIDU) in December 2021 revealed its metaverse offering called Xi Rang, a virtual world and a set of tools that will allow developers to build metaverse applications. Xi Rang, which means “land of hope,” can be accessed via VR goggles or smartphones. Earlier this year Baidu, Inc. (NASDAQ:BIDU) talked about Xi Rang MetaStack at the company’s annual flagship developers’ conference. Similarly, it has also launched Baidu AI Cloud digital avatar platform XiLing, which is a platform-level product integrating digital avatar generation and content production.
In an interview with Forbes, Baidu, Inc. (NASDAQ:BIDU)’s vice president Ma Jie explained the company’s metaverse vision in the following words:
“We want to be like the Amazon Web Services (AWS) for the metaverse. It is closer to the infrastructure layer of today’s computing ecosystem.XiRang is an invisible platform. Creator City, a virtual world where we held our Developer Conference last year, is really just a showcase of XiRang’s abilities. We wanted to show developers that they can use XiRang’s tools, software and other capabilities to build their own virtual worlds. Our capabilities include avatar, movements and interactions, natural languages, multimedia display, and many more. We will build other capabilities such as cloud rendering to push the industry forward.”
A total of 40 hedge funds tracked by Insider Monkey were bullish on Baidu, Inc. (NASDAQ:BIDU) as of the end of the fourth quarter of 2022. The biggest stakeholder of Baidu, Inc. (NASDAQ:BIDU) is John W. Rogers’s Ariel Investments which owns a $326 million stake in the company.
7. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 106
NVIDIA Corporation (NASDAQ:NVDA) offers a dedicated platform that allows people to develop metaverse applications. The platform is called Omniverse. In March this year, NVIDIA Corporation (NASDAQ:NVDA) partnered with Microsoft Corporation (NASDAQ:MSFT) after which Microsoft Azure will host NVIDIA Omniverse Cloud to give access to developers who want to design, develop, deploy and manage industrial metaverse applications.
Insider Monkey’s database of 943 hedge funds shows that 106 hedge funds had stakes in NVIDIA Corporation (NASDAQ:NVDA), up from 89 funds in the previous quarter. This shows that hedge funds piled into NVIDIA Corporation (NASDAQ:NVDA) in the last quarter of 2022. The biggest stakeholder of NVIDIA Corporation (NASDAQ:NVDA) is David Goel and Paul Ferri’s Matrix Capital Management which owns a $741 million stake in the company.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 113
Chinese Cloud and e-commerce giant Alibaba Group Holding Limited (NYSE:BABA) is offering several metaverse offerings. Alibaba Group Holding Limited (NYSE:BABA)’s Cloud platform offers special software features and tools to develop metaverse applications. Alibaba Group Holding Limited (NYSE:BABA) last year rolled out extended reality features for online shoppers to give them an immersive experience using digital avatars.
Alibaba Group Holding Limited (NYSE:BABA) shares gained recently after media reports suggested that regulators in China will reduce fines against Ant Group, Alibaba’s fintech arm.
Hedge funds were piling into Alibaba Group Holding Limited (NYSE:BABA) shares during the fourth quarter, as Insider Monkey’s database of 943 hedge funds shows that 113 hedge funds had stakes in the company, up from 105 hedge funds in the previous quarter.
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Disclosure: None. 11 Best Metaverse Stocks To Invest In is originally published on Insider Monkey.