We recently published a list of 7 Best Gaming Stocks To Buy Now. In this article, we are going to take a look at where Take-Two Interactive Software Inc. (NASDAQ:TTWO) stands against the other best gaming stocks to buy now.
A Quick Look at the Gaming Industry
The gaming industry does not only provide entertainment but also drives innovation in technology and creativity. The global gaming market was valued at $249.55 billion in 2022. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 13.1% during 2023-2030 to reach $665.77 billion by the end of the forecast period. This expansion is driven by several key trends that are reshaping how games are developed and played.
The growing popularity of cloud gaming, the introduction of VR and AR technologies, and the rising interest in online gaming are some of the key trends driving market growth.
The rising interest in esports and online gaming tournaments is expected to boost consumer spending on games and contribute to market growth. Esports features teams and individual players competing in various video games. In July and August, the first-ever Esports World Cup took place in Riyadh, Saudi Arabia, attracting over 1,500 players and offering a massive prize pool of $60 million. The event spanned eight weeks and included 23 competitions across 22 different video games, such as Call of Duty and Fortnite. This tournament is part of Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the country’s economy.
Emergence of Generative AI
Another key trend is the integration of generative AI in gaming. This technology allows for the creation of dynamic storylines and realistic characters that can interact with players in a more lifelike manner. Experts believe this will enhance player engagement by personalizing experiences based on individual actions. The potential for AI to craft entire game worlds opens up new avenues for creativity in game design.
According to Bernard Marr, a world-renowned futurist and author of “Generative AI in Practice: 100+ Amazing Ways Generative Artificial Intelligence is Changing Business and Society”, generative AI is revolutionizing video game development by providing tools that enable developers to create engaging content, realistic visuals, and immersive gameplay experiences. Marr believes that generative AI can help developers create vast, unique game environments through procedural generation, allowing for dynamic gameplay experiences that change with each session.
Moreover, this technology can generate music and sound effects that adapt to in-game events, enriching the overall player experience. By automating tasks like quest creation and dialogue writing, generative AI can help developers enhance storytelling and design. Marr thinks that although generative AI won’t replace human creativity, it can speed up game development and reduce costs, which is a big step forward for the gaming industry.
Methodology
To compile our list of the 7 best gaming stocks to buy now, we used the Finviz and Yahoo stock screeners to find the largest gaming companies. We also reviewed our own rankings, sifted through ETFs, and consulted various online resources. From an initial pool of more than 20 gaming stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best gaming stocks to buy now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a hand holding a game controller, demonstrating the interactive entertainment of the company.
Take-Two Interactive Software Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 48
Take-Two Interactive Software Inc. (NASDAQ:TTWO) is a prominent American video game holding company based in New York City. It specializes in developing, publishing, and marketing interactive entertainment products for consumers worldwide. The company operates through well-known brands such as Rockstar Games, 2K, Private Division, and Zynga, which cater to various gaming platforms including consoles, PCs, and mobile devices. The company’s wide range of games are delivered through physical retail, digital downloads, online platforms, and cloud services.
The company reported solid performance in the first quarter of fiscal year 2025, with total net bookings rising to $1.22 billion, a 1% increase from the previous year. Net bookings from recurrent consumer spending accounted for 83% of total net bookings. Key contributors to net bookings included popular titles like NBA 2K24, Red Dead Redemption, and Grand Theft Auto Online. The company’s net revenue saw a 4% increase year-over-year, reaching $1.34 billion. Recurrent consumer spending increased by 3% and accounted for 82% of the total revenue.
Take-Two Interactive Software Inc. (NASDAQ:TTWO) is committed to engaging players through exciting new game releases and updates. The company is focused on enhancing its core franchises while also looking for new growth opportunities. On September 6, 2024, the company announced the launch of NBA 2K25, the latest iteration of its popular basketball video game series. This new version is available on multiple platforms, including PlayStation 5, PlayStation 4, Xbox Series X|S, Xbox One, Nintendo Switch, and PC. NBA 2K25 introduces significant gameplay enhancements powered by ProPLAY technology, featuring over 9,000 new animations derived from real NBA footage. The game also includes exciting new modes in MyTEAM and The City, along with returning favorites and new role-playing experiences in MyCAREER and MyNBA, offering players a richer and more immersive basketball gaming experience.
As of October 7, TTWO’s stock is trading at $152.21, and analysts have a consensus buy recommendation for the stock. The median 1-year stock price target set by analysts is $185.00, indicating a potential upside of 21.54% from its current price. This presents a promising investment opportunity for those looking to capitalize on the future of interactive entertainment.
Take-Two Interactive Software Inc. (NASDAQ:TTWO) has a strong portfolio of well-established franchises with a loyal customer base, consistently driving sales and engagement. The company’s commitment to providing regular updates and new content helps maintain player interest and satisfaction, ensuring a steady stream of revenue from both new releases and ongoing content. This strategic approach allows the company to benefit from the growing video games market.
TTWO is one of the best gaming stocks to buy now. According to Insider Monkey’s Q2 database of over 900 hedge funds, 48 hedge funds held stakes in Take-Two Interactive Software Inc. (NASDAQ:TTWO).
Overall, TTWO ranks 4th among the best gaming stocks to buy now. While we acknowledge the growth potential of TTWO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TTWO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.