We recently compiled a list of the 8 Best Esports Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other esports stocks.
The Future of Esports: Emerging Trends and Market Potential
The esports sector is experiencing significant growth and transformation, driven by evolving trends and increased investment. According to The Business Research Company, the global esports market was valued at $1.63 billion in 2023. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 16.4% during 2024-2028 to reach $3.48 billion by the end of the forecast period.
Technological advancements continue to shape the future of esports. The integration of generative AI in gaming is creating more immersive experiences, while cloud gaming continues to gain traction. As these technologies evolve, they are expected to enhance player engagement and expand the esports audience.
Another key trend is the rise of live streaming. This also offers exciting avenues for both content creators and advertisers looking to connect with a dynamic audience. Comscore’s 2024 State of Gaming Report revealed that gamers spent 45 billion hours on online video content in 2023.
Esports and live streaming are gaining traction, particularly among younger generations. The report shows that about 86% of Gen Z and 80% of Millennials who are aware of esports have watched it. Additionally, 53% of Gen Z and 61% of Millennials have engaged with live streaming. The report also highlights that 79% of viewers prefer watching esports with others. This indicates the social nature of esports.
The rise of platforms like Twitch and YouTube Gaming has made esports more accessible, further fueling interest and participation.
Additionally, the Middle East is emerging as a significant market for esports, thanks to initiatives like Saudi Arabia’s Vision 2030, which aims to diversify the country’s economy. Major events, such as the Esports World Cup held in Riyadh, have drawn thousands of participants and substantial prize pools, showcasing the region’s potential. Here’s a short excerpt from our previous article “7 Best Gaming Stocks To Buy Now” that discusses this in more detail:
“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.”
Overall, the esports sector is poised for continued growth. As organizations adapt to new market dynamics and leverage innovative technologies, the future looks promising for investors interested in this vibrant industry.
Methodology
To compile our list of the 8 best esports stocks to buy according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest gaming and esports companies. We also reviewed our own rankings and consulted various online resources. We carefully verified our list to remove any companies that can not be classified as esports stocks. Next, from an initial pool of more than 20 esports stocks, we focused on the top 8 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 8 best esports stocks to buy 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 development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American technology company that is mainly known for its software products like the Windows operating system. However, it is also a significant player in the esports market, largely due to its Xbox consoles and gaming services. A major factor that has enhanced the company’s standing in the esports industry was its acquisition of Activision Blizzard in October 2023, for approximately $69 billion. This acquisition brought popular franchises like Call of Duty, Warcraft, and Diablo under Microsoft’s umbrella, enhancing its gaming business across various platforms including mobile and cloud.
In its fiscal fourth quarter of 2024, Microsoft Corporation (NASDAQ:MSFT) reported impressive financial results, with total revenue reaching $64.7 billion, a 15% increase from the same quarter in the previous year. The gaming division experienced remarkable growth, with revenue rising by 44%, significantly boosted by the Activision Blizzard acquisition. Xbox content and services revenue increased by 61%, indicating strong support from the Activision Blizzard deal.
Microsoft also reported an operating income of $27.9 billion and a net income of $22 billion for the quarter, reflecting year-over-year increases of 15% and 10%, respectively. Notably, the corporation now boasts over 500 million monthly active users across its gaming platforms. Microsoft Corporation (NASDAQ:MSFT) also previewed a record 30 new titles during the quarter that ended June 30, 2024, including anticipated releases like Call of Duty: Black Ops 6 set to launch on Game Pass. This further demonstrates the company’s commitment to expanding its gaming portfolio.
On September 16, 2024, the company announced a quarterly dividend of $0.83 per share, marking a 10% increase from the prior quarter. The board of directors of Microsoft Corporation (NASDAQ:MSFT) also approved a share repurchase program allowing up to $60 billion in buybacks without an expiration date.
Overall, Microsoft Corporation’s (NASDAQ:MSFT) strategic moves in the gaming sector and strong financial performance position it as a compelling esports stock for investors looking to capitalize on the growing gaming market.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 279 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT) as of June 30, 2024.
Overall MSFT ranks 1st among the best esports stocks to buy according to hedge funds. While we acknowledge the potential of MSFT 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 MSFT 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.