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by Joseph Hargett | December 4, 2021
Great Ones, I’ve been reluctant to talk about the so-called “metaverse” for a multitude of reasons. The first of which is that the metaverse is all but sure to fall short of my childhood dreams.
I mean, I grew up on fantasy and sci-fi flicks and Saturday morning cartoons. I swooned over The Matrix and Ready Player One, dove headfirst into anime like Sword Art Online and Neon Genesis Evangelion and drooled over the future possibilities of virtual reality (VR) video games.
Has anyone else out there played VR Skyrim, Vader Immortal or VR Star Wars: Squadrons?
Those, in my humble opinion, are stellar examples of the possibilities of VR immersion and the metaverse. I want more of that.
Who out there wants to take their Facebook arguments into a VR world? Who wants VR ads, for that matter?
Since most of you Great Ones are degenerates like me, I figured you blew off the metaverse just like I did following Zuckerberg’s proclamation. I was wrong:
Just have to say look forward to reading you everyday.
I would love to hear your thoughts on metaverse. I see people eventually never leaving their house. With stimulus money, food deliveries, and metaverse to go to, why leave. The only thing they will need is a robot to answer the door and get the deliveries.
Makes me laugh because I know it’s coming — Jim
Thanks for writing in, Jim! If one Great One is asking about the metaverse, then I know more of you are interested … but just not writing in. Seriously, we don’t bite. I promise!
So, today I’ll attempt to set aside my own personal aspirations for what the metaverse should be and dive into the investment potential of the tech sector’s new shiny toy.
And since we’re talking about investing potential, I’m also going to give you my top five stocks for investing in this brave new metaverse world. But first…
The metaverse is a persistent, online 3D virtual environment.
In the metaverse, you could hypothetically visit anywhere — real or not — without leaving your home. Wanna visit Paris or Tokyo but can’t afford airfare? The metaverse can take you there — assuming someone has built Paris or Tokyo somewhere in the metaverse.
But you could also visit Antarctica, the Sahara Desert, Mt. Everest, Mars … or even Coruscant, Arrakis or Hobbiton.
Or, if you’re down for the more mundane … you could even virtually walk down the aisles of your favorite retailer without having to scroll through page after page of search results. Looking for pipe fittings at Home Depot could become a bit more interesting, I guess.
And you can do all of this right from your laptop, PC, smartphone, video game console or VR headset.
You’re not wrong, Jim: Eventually, if the metaverse truly takes off, people won’t ever have to leave their homes again for entertainment, shopping or even work. Imagine that … working from home but making your manager happy by being in your virtual seat at the virtual office.
Sounds just grand, doesn’t it?
Now, don’t go rushing off to buy a VR headset or search online for a metaverse version of Hot Topic or Luis Vuitton just yet. They don’t exist. The metaverse is still pretty ethereal, and it will be for quite some time.
Right now, the best metaverse experiences you can find are in video games like Roblox, Minecraft or VR Skyrim. Pretty much any game with a 3D online persistent world could be loosely considered part of the early metaverse.
For the metaverse to really take off, we will need better hardware, better software … and some extra level of realism or experience that draws people in.
After all, anyone can see the top of Mt. Everest right now. You can go to Google and look it up. Find some pretty pictures and even look around a bit with VR.
But feeling it? Experiencing it? That level of technology in the metaverse is a long way off.
But Great One Jim is right. It’s coming … eventually. In fact, the following five companies are market leaders helping to build the future of the metaverse right now:
First things first … let’s set expectations. There are no dedicated or specialized metaverse companies — despite what Mr. Zuckerberg says about Meta.
But there are companies that specialize in exactly what the metaverse needs to grow. We’re talking hardware — mainly semiconductors — and software.
Second, I will not recommend Meta Platforms. No one wants a VR metaverse version of Facebook or Instagram. Period.
In fact, the only thing Meta has going for it in the metaverse space is that it owns Oculus, a standalone VR headset and software maker. It’s a very good VR headset that could help expand the metaverse, but we all know Zuckerberg is more focused on the social media aspects of the metaverse … and I just don’t see Facebook leading that charge.
Finally, we are in the very, very, very early stages of the metaverse. In other words, if you invest in a company purely for its metaverse exposure, you’re going to wait a long time for potential returns. This is ground-floor investing at its finest.
Luckily, every company I’m about to highlight has its fingers in multiple pies … so your investment capital won’t live or die alongside the metaverse hype.
And with that, let’s get to it. Here are my top five metaverse investment picks:
Unity Software is my long-shot pick for the metaverse. The company operates a 3D development platform that allows users to create, run and monetize real-time interactive 3D content. In short, Unity makes software that allows software developers to create 3D apps for mobile and social media.
About 71% of the top 1,000 mobile games run on Unity, giving the company a distinct edge should the metaverse ever take off on mobile or social media.
But Unity doesn’t bill itself as a metaverse company. It’s a 3D mobile game development company. But if the metaverse is going to gain ground, it needs entertainment. And Unity is poised to help provide that entertainment.
Luckily, Unity is growing just fine without the metaverse right now. Since going public in 2020, the company has seen revenue grow by an average of 45% per quarter.
Unity also owns Weta Digital, a software division that creates special effects for movies. You might’ve seen a couple of them: Lord of the Rings, Wonder Woman, Avatar ring any bells?
In the end, Unity has all the tools it needs to be a major player in the metaverse, especially on the mobile and social media end of the spectrum.
Speaking of a mobile metaverse, all that data has to make it to your smartphone before you can even enter the metaverse. And it does that by using Qualcomm semiconductors.
Qualcomm is the leading telecommunications and wireless chipmaker worldwide. I’m pretty sure there isn’t a smartphone or internet-connected mobile device out there that doesn’t use Qualcomm chips. If the metaverse is truly going to take off, mobile data speeds need to be faster — we’re talking the high end of 5G speeds for a really good, near-immersive experience.
Now, you might be thinking: “If people just sit there looking at the metaverse, why would they need mobility?”
The answer: wires. It’s hard to have a real, immersive and unobstructed jaunt around any virtual 3D world with wires tripping you up. One YouTube search for VR fails should convince you of that.
This is where Qualcomm will shine in the metaverse, making the experience truly mobile and unobstructed by cables.
Editor’s Note: Data … It’s What’s For Lunch!
Right now, hardly anyone on Main Street knows that a silent tech revolution is going on.
But the smart money is already piling in, with an estimated 916 of the Fortune 1000 companies urgently investing in this technology.
If anybody out there is gonna figure out how to bring the metaverse into the office, it’s Microsoft. The company is an enterprise software juggernaut. What’s more, most of the world’s laptops and desktops run on Windows.
If Microsoft starts integrating metaverse aspects into its software, you know things are gonna be big. I could see Microsoft Teams taking full advantage of a metaverse where people can meet virtually for critical business meetings. Or virtual metaverse cooperation in Microsoft Office 365 for design teams scattered across the globe.
And if you think this is just a pipe dream, think again. Microsoft Mesh is already working toward virtual metaverse meetings in Teams. Wanna have a business meeting on the beach in Borneo? No need to book a flight — just fire up Mesh for Teams and create your own virtual conference room on the beach.
Let’s get this out of the way: I don’t like Roblox. I don’t like Roblox games, and I don’t like the kids who play them. We’re more of a Minecraft house, for what it’s worth.
That said … Roblox is about the purest metaverse investment out there.
The company operates an online, virtual entertainment space that’s exactly what experts describe when they talk about the metaverse. Roblox offers users the ability to play in virtual worlds and provides developers the means to create games and other entertainment experiences virtually online.
Right now, though, Roblox is most popular with kids ages 16 or younger. In fact, during 2020, more than half of Americans 16 or younger played Roblox. That’s staggering. And it points to a massive potential consumer base for adult versions of the Roblox metaverse when these kids grow up.
The bottom line is that Roblox is really the only company offering a true metaverse experience right now.
Oh, and if you’re one of those “traditional” investors who worry about fundamentals, Roblox saw 2021 third-quarter revenue more than double year over year to $509 million, with user platform hours surging 28% to 11 billion.
Yes, Roblox users spent 11 billion hours on the platform in the third quarter of 2021 alone. I guess there’s something to this metaverse thing after all.
In my opinion, Nvidia is the end-all-be-all of metaverse investments. Think about it…
The metaverse is gonna thrive on two critical things: graphics processing and AI.
You can create all the virtual spaces you want, but if they look like garbage, no one is gonna visit them. Nvidia is the market leader in pretty graphics … just ask any gamer.
Furthermore, any virtual guides or storefronts will need someone or something to help guide metaverse travelers. That means AI, and Nvidia is one of the global leaders in this computing field … just ask anyone working on self-driving cars.
Add to this Nvidia’s leaps and bounds in data center processing, and you have the makings of the biggest metaverse player in the market. And Nvidia is already making bets in that direction. Earlier this year, Nvidia launched Omniverse — a software collaboration project that allows developers to share, travel and interact with digital virtual worlds.
If Roblox is the pioneer of metaverse spaces right now, Nvidia is the one building roads between these digital worlds. According to Nvidia, Omniverse provides the tools to simulate physically traveling from one virtual world to another, combining apps and tools to help speed up metaverse expansion and adoption.
As Great Stuff Picks readers already know, Nvidia has been on fire since I recommended it back in May. I’m not going to recap my reasons for recommending NVDA stock, so if you want those, click here.
But what I will say is that I didn’t take the metaverse into account when I initially researched NVDA stock’s potential for growth. If the metaverse takes off like so many on Wall Street believe, then that is one more major feather in Nvidia’s cap … and yours, if you invested in NVDA stock.
That wraps it up for today’s look at the metaverse. Jim, I’m sure that wasn’t the snark you were looking for. Unfortunately, I’m actually looking forward to the world you described … I already don’t leave my house all that much, after all.
However, I hope I provided an overview of the metaverse’s potential and gave you more than a few investment ideas to take advantage of this new shiny tech toy.
If that’s still not enough to impress you, Jim, then check this out:
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As always, thank you for coming to my Great Chat!
If you have a stock or investing idea you’d like to see covered in the Great Stuff weekend edition, let us know at: GreatStuffToday@BanyanHill.com.
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Until next time, stay Great!
Editor, Great Stuff