In this article, we will take a look at the 12 best metaverse stocks to invest in. To skip our detailed analysis of the Metaverse and its advancements, go directly to 5 Best Metaverse Stocks To Invest In.
While the idea of a real-life “Matrix” may appear to belong solely to the realm of science fiction, it is important to remember that notions such as self-driving cars, smartphones, and even the internet itself were once deemed fantastical concepts too. The metaverse, a digital sphere still in its early evolution, is an immersive three-dimensional universe that has become a hot topic in the world of technology. Individuals within the metaverse engage in virtual environments and forge connections with others in the digital realm. Following Facebook’s name change to Meta Platforms, Inc. (NASDAQ:META), there was a staggering surge of 7,200% in internet searches for the term ‘metaverse’. Once individuals grasp the concept, a significant majority wholeheartedly embrace it: according to recent research conducted by McKinsey, around 60% of consumers express excitement about the metaverse’s potential to transform everyday activities such as shopping, dating, and exercising.
According to a report by Precedence Research, the global metaverse market accounted for $68.49 billion in 2022 and it is estimated to surpass around $1.3 trillion by 2030 with a registered CAGR of 44.5% during the forecast period 2022 to 2030. While the potential impact of the metaverse varies across industries, it holds implications for all of them. McKinsey, for example, estimates that it may have a market impact of between $2 trillion and $2.6 trillion on e-commerce by 2030. Similarly, an impact of $180 billion to $270 billion on the academic virtual learning market is expected, while a $108 billion to $125 billion impact is anticipated on the gaming market.
Overall, this industry is poised to grow with more companies planning to get involved. The technologies that are involved with the metaverse can include virtual reality (VR), characterized by persistent virtual worlds that continue to exist even when you are not playing, as well as augmented reality (AR) that combines aspects of the digital and physical worlds. Companies like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA) are among the many that are making strides in the space and could be at the forefront of the metaverse’s massive opportunity. If you want to read up on different technological spaces, and their respective market analysis, you can start with our article on the 10 Internet of Things (IoT) Stocks Billionaires Are Loading Up On
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Our Methodology
For this article we scanned Insider Monkey’s database of 943 hedge funds and picked 12 metaverse-related companies with the highest number of hedge fund investors. Our selection process focused on companies involved in metaverse-related software or hardware, with a substantial presence in the domains of metaverse, AR (Augmented Reality), VR (Virtual Reality), and extended reality.
12 Best Metaverse Stocks To Invest In
12. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 24
Unity Software Inc. (NYSE:U) stands as a prominent figure within the realm of real-time 3D content creation, solidifying its position as a dominant force in the metaverse market. Its platform serves as a toolbox that empowers developers to construct immersive 3D environments that form the very foundation of the metaverse. The company has achieved remarkable financial success, with an impressive 56% year-over-year sales growth in the first quarter of 2023. Furthermore, Unity Software Inc. (NYSE:U) has revised its fiscal 2023 outlook, anticipating even stronger results that are poised to surpass estimates. A staggering revenue of $2.6 billion by the end of 2024 is expected, reflecting a remarkable 87% increase in sales compared to the previous year.
On June 6, Piper Sandler stated that the longer-term Unity Software Inc. (NYSE:U) vision and strategy to become a developer platform of choice for 3D applications could be reinforced by Apple’s new spatial computer launch, Vision Pro. Aside from Apple, Unity Software Inc. (NYSE:U)’s developer job openings at TikTok, Meta, Samsung, Snap, and Microsoft hint at broader appeal in augmented reality/virtual reality applications. Piper maintained an Overweight rating on the company with a $43 price target.
At the end of the first quarter of 2023, 24 hedge funds in the database of Insider Monkey held stakes worth $1.69 billion in Unity Software Inc. (NYSE:U), compared to 23 in the preceding quarter worth $1.54 billion. Jim Davidson, Dave Roux and Glenn Hutchins’ Silver Lake Partners held the highest stake in the company, worth approximately $1.13 billion.
Similar to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), Unity Software Inc. (NYSE:U) is a global leader in metaverse advancement.
11. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 37
Roblox Corporation (NYSE:RBLX), an online entertainment platform renowned for enabling game development, arguably stands as one of the closest things to a functioning metaverse today. With over 50 million daily active users, Roblox represents more than just a video game—it boasts its own digital currency and offers a diverse array of distinctive virtual experiences.
On June 13, Canaccord analyst Jason Tilchen initiated coverage of Roblox Corporation (NYSE:RBLX) with a Buy rating and $48 price target. While the company began as a gaming hub for young kids, Roblox Corporation (NYSE:RBLX) has evolved to become “one of the leading destinations for immersive gaming and social interactions in persistent virtual worlds” driven by ongoing investments to introduce more realistic avatars and communication features. The analyst see potential for upward estimate revisions if the company can execute on strategic initiatives to attract more spending to the platform alongside a long-term opportunity to enter new verticals.
According to Insider Monkey’s first quarter database, 37 hedge funds were bullish on Roblox Corporation (NYSE:RBLX), up from 29 funds in the earlier quarter. Billionaire Ken Griffin’s Citadel Investment Group held a $95 million stake in the company.
SaltLight Capital Management made the following comment about Roblox Corporation (NYSE:RBLX) in its Q4 2022 investor letter:
“We’ve used this incremental capital strategy with some of our ‘early-stage’ investments such as Roblox Corporation (NYSE:RBLX), Purple Group, Transaction Capital and Karooooo (Cartrack).
Today, we would like to discuss one of our early-stage investments, Roblox. While there is a risk that we may be premature, mistaken, or even wrong in our evaluation of this opportunity, we see Roblox as a company with the potential to ‘matter’.
Roblox is a 3D real-time content platform that bridges consumers and creators. Instead of being a conventional gaming product, Roblox acts as a tool provider that democratises the creation of 3D real-time user-generated content (UGC)…” (Click here to read the full text)
10. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 43
Baidu, Inc. (NASDAQ:BIDU) is a Chinese multinational technology company specializing in Internet-related services, products, and artificial intelligence, headquartered in Beijing’s Haidian District. One of the largest AI and Internet companies in the world, Baidu, Inc. (NASDAQ:BIDU) is actively working on developing XiRang, an invisible web of technological capabilities that the company is developing to support the development of the metaverse.
On June 20, Morgan Stanley analyst Gary Yu upgraded Baidu, Inc. (NASDAQ:BIDU) to Overweight from Equal Weight with a price target of $190, up from $160. According to the analyst, Baidu is the most obvious beneficiary of the $7.4T AI internet opportunity in China, and estimates 31% CAGR in Baidu, Inc. (NASDAQ:BIDU)’s cloud revenue by 2025.
According to Insider Monkey’s first quarter database, 43 hedge funds were bullish on Baidu, Inc. (NASDAQ:BIDU), up from 40 funds in the last quarter.
9. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 52
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is an American video game holding company based in New York City and founded by Ryan Brant in September 1993. The company owns two major publishing labels, Rockstar Games and 2K, which operate internal game development studios. The company is poised to dominate the metaverse conversion, especially with the success of the GTA RP mod and the upcoming GTA 6 title.
Deutsche Bank raised its price target for Take-Two Interactive Software, Inc. (NASDAQ: TTWO) from $120 to $155 on June 2, while maintaining a Hold rating on the shares. The firm’s research note highlighted that Take-Two Interactive Software, Inc. (NASDAQ: TTWO) has enhanced its long-term guidance, resulting in an improved overall outlook.
According to Insider Monkey’s first quarter database, 52 hedge funds were long Take-Two Interactive Software, Inc. (NASDAQ:TTWO), compared to 53 funds in the prior quarter. Billionaire Chase Coleman’s Tiger Global Management is a prominent stakeholder of the company, with 2.4 million shares worth $286.3 million.
Diamond Hill All Cap Select Strategy made the following comment about Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in its Q4 2022 investor letter:
“Video game developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has faced weakness in the mobile gaming market, in addition to game-launching delays. The company reported underwhelming quarterly results in Q4 and lowered its full-year guidance. After reexamining our long-term thesis, we decided to exit our position in favor of more attractive opportunities.”
Much like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is an attractive stock for investors that are looking to invest in the metaverse.
8. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 57
Autodesk, Inc. (NASDAQ:ADSK) is an American multinational software corporation that makes software products and services for the architecture, engineering, construction, manufacturing, media, education, and entertainment industries. The company’s Revit building information modeling program is employed by engineers and architects to construct virtual models of structures. These models can then be transformed into immersive virtual reality settings using Autodesk Rendering. Since about 70% of Autodesk, Inc. (NASDAQ:ADSK)’s business comes from design software for architecture, engineering and construction (AEC), it holds a significant interest in the future of the metaverse.
According to Insider Monkey’s first quarter database, 57 hedge funds were bullish on Autodesk, Inc. (NASDAQ:ADSK), compared to 54 funds in the prior quarter. Autodesk, Inc. (NASDAQ:ADSK)’s largest hedge fund investor is Ian Simm’s Impax Asset Management with a $253 million investment.
Arch Capital made the following comment about Autodesk, Inc. (NASDAQ:ADSK) in its Q3 2022 investor letter:
“Let’s look at a specific example. One of our portfolio companies is Autodesk, Inc. (NASDAQ:ADSK), a construction/engineering/architecture software business with an incredible moat. Our cost basis on the stock is $230. Shares traded as high as $340 in 2021 but today are down around $200. With this declining share price, Autodesk management has been able to take the healthy free cash flow it generates and retire some of its shares outstanding at an accelerated rate.
At the beginning of 2022, Autodesk had approximately 220 million shares outstanding. Today, that number is down to around 216 million, and we expect this number to continue to drop over the next few years as the company ramps up its free cash flow generation. This reduction in share count will juice growth in free cash flow per share, which will determine what returns we get owning Autodesk over the long haul. The lower the stock drops, the faster Autodesk’s share count drops, all else equal.”
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 69
Qualcomm Incorporated (NASDAQ:QCOM) is an American multinational corporation headquartered in San Diego, California, and incorporated in Delaware. Involved in the creation of semiconductors, software, and services related to wireless technology, the company owns patents critical to the 5G, 4G, CDMA2000, TD-SCDMA and WCDMA mobile communications standards.
Earlier in September 2022, Qualcomm Incorporated (NASDAQ:QCOM) joined forces with Telefónica in a collaborative effort to fortify their leadership in the future of XR (Extended Reality) and the Metaverse. Their partnership aims to foster the development and expansion of the XR ecosystem, harnessing the power of Qualcomm’s Snapdragon Spaces XR Developer Platform alongside Telefónica’s advanced fixed and mobile network infrastructure. The agreement encompasses the exploration of shared commercial prospects as well as the introduction of XR/Metaverse products and services.
According to Insider Monkey’s first quarter database, 69 hedge funds were bullish on QUALCOMM Incorporated (NASDAQ:QCOM, compared to 82 funds in the earlier quarter.
Earlier this May, Canaccord maintained a Buy rating on QUALCOMM Incorporated (NASDAQ:QCOM) with a $152 price target. The firm appreciated the company’s execution of its diversification growth strategy.
Madison Sustainable Equity Fund made the following comment about QUALCOMM Incorporated (NASDAQ:QCOM) in its Q1 2023 investor letter:
“QUALCOMM Incorporated (NASDAQ:QCOM) stock was volatile during the quarter but moved higher in March. Qualcomm fundamentals have been hurt over the last several quarters due to excess smartphone inventories. Management messaged in their recent conference call that inventory issues peaked in their first fiscal quarter and should begin to moderate. They are also seeing excess inventory in their IoT (Internet of Things) business, which will take a couple of quarters to work through. By our estimates, Qualcomm fundamentals should trough in the June quarter with a second-half recovery. Qualcomm remains well positioned to diversify away from smartphones with long-term growth in Auto and IoT.”
6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 99
Adobe Inc. (NASDAQ:ADBE), originally called Adobe Systems Incorporated, is an American multinational computer software company known for its multimedia and creativity software products, including Photoshop, Acrobat Reader, and Creative Cloud. This past year, Adobe, Inc. (NASDAQ:ADBE) released its 3D Capture tool that is designed to make it easier to create three-dimensional digital objects for marketing campaigns, video games and the metaverse.
On June 16, Kirk Materne from Evercore ISI reaffirmed an Outperform rating on shares of Adobe Inc. (NASDAQ: ADBE). Additionally, the analyst increased the price target for the stock from $475 to $590.
According to Insider Monkey’s first quarter database, 99 hedge funds were bullish on Adobe Inc. (NASDAQ:ADBE), with collective stakes worth $7.3 billion, compared to 99 funds in the prior quarter worth $8.3 billion.
Polen Capital made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet and Adobe Inc. (NASDAQ:ADBE) is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), Adobe Inc. (NASDAQ:ADBE) is a prominent metaverse stock.
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Disclosure: None. 12 Best Metaverse Stocks To Invest In is originally published on Insider Monkey.