When it comes to big technology themes, it’s hard to look past the ‘metaverse’. An interconnected virtual world combining a number of advanced technologies including virtual reality, augmented reality and 5G, the metaverse can be thought of as the next chapter of the internet (i.e. ‘Web 3.0’), or an internet we can enter virtually.
One obvious way to get exposure to the metaverse, as an investor, is through buying shares in Meta Platforms, the company formerly known as Facebook. It’s currently spending around $10bn per year to build its metaverse. However, there are plenty of other stocks that offer exposure to this exciting growth story. Here’s a look at three I’d be happy to buy today.
Microsoft
One of my top stock picks for metaverse exposure is Big Tech giant Microsoft (NASDAQ: MSFT). As a major player in both video gaming and collaboration software, I expect it to be at the forefront of the metaverse revolution in the years ahead.
In terms of its plans for the metaverse, Microsoft CEO Satya Nadella has said that the group is currently creating an entirely new platform designed to bring people, places, and things together with the digital world. This will have applications in both the consumer space and the enterprise space. An important development here is its new Mesh product. This is a collaborative platform for virtual experiences that can be accessed from any device.
The risk here is that MSFT is likely to face plenty of competition from Meta Platforms in the years ahead. So, there’s no guarantee it will be a winner in the metaverse. I’m comfortable with this risk though, as Microsoft is a diversified company with exposure to a number of other high-growth industries.
Overall, I think it’s a great stock for me to own for the long term.
Nvidia
Another top metaverse stock, in my view, is Nvidia (NASDAQ: NVDA). It designs high-power computing chips that are used to power video gaming and artificial intelligence applications. Given the strength of its chips, I think Nvidia is likely to be a key ‘enabler’ of the metaverse.
Last year, Nvidia announced that it had developed its own metaverse-type platform, the ‘Omniverse’. This is an advanced technology platform that brings together the group’s expertise in AI simulation and graphics, and can be used to create virtual avatar characters, interpret speech, and create new 3D worlds. This platform appears to have a lot of potential.
Nvidia is an expensive stock that’s highly volatile. So, it’s not one for those seeking capital preservation. I’m willing to tolerate short-term share price swings, however. I think the long-term growth potential here is significant.
Roblox
Finally, I like Roblox (NYSE: RBLX) as a more speculative play on the metaverse. It’s a video gaming company with a platform that enables users to come together to play, learn, communicate, explore, and expand their friendships online. With over 50m daily users, you could say that Roblox has already created its own metaverse.
Roblox stock has underperformed recently, however, the company continues to grow at a rapid rate. Last year, for example, revenue increased 108% year on year to $1.9bn. Given the popularity of video gaming globally, I see plenty of growth ahead. This year, analysts expect revenue of around $2.9bn.
I’ll point out that Roblox is not a stock I’d load up on. The company isn’t yet profitable, so it’s a high-risk investment. I do see plenty of growth potential though. So, I’d be willing to take a small position here.