The metaverse is a shared virtual 3D world or worlds, which are interactive and collaborative. It encompasses a range of technologies in the field of collaborative spatial computing. The technologies include interactive 3D graphics, augmented reality (“AR”), virtual reality (“VR”), online economies, multi-user gaming and more.
Once viewed as science fiction, the metaverse is now viewed as the future of gaming, entertainment, brands, e-commerce and enterprises. Any device capable of rendering an immersive 3-dimensional experience (including a PC or even an iPhone) is considered to be metaverse capable.
With more and more companies from various industries joining the Meta bandwagon, it is clear that metaverse will dictate the next generation of the Internet sooner or later as it offers a significant investment opportunity in the coming years.
Growth Prospects Rife for Metaverse Players
The global metaverse market size is expected to grow from $61.8 billion in 2022 to reach $426.9 billion by 2027, at a compound annual growth rate (“CAGR”) of 47.2% during the forecast period, per a MarketandMarkets report.
The primary market for online game makers and gaming hardware may top $400 billion in 2024, while the remaining business will come from live entertainment and social media. Gaming, AR and VR create a $413 billion primary market for metaverse, per a Bloomberg Intelligence report.
Hosted by the Khronos Group, the Metaverse Standards Forum has been created with the aim to establish interoperability standards for the predicted metaverse. Participants in the Metaverse Standards Forum include many of the biggest companies working in the space, from chip makers to gaming companies, as well as established standards-setting bodies like the World Wide Web Consortium (W3C).
While major global indices continue to tumble as the Fed turns hawkish to tame stubbornly high inflation, astute investors should, thus, keep an eye on companies like Meta Platforms META, Microsoft MSFT and Roblox RBLX, which are gearing up to capitalize on the metaverse boom. These companies currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Year-to-Date Performance
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Meta Aims to Produce Economic Opportunities in the Metaverse
Facebook-parent Meta Platform’s metaverse ambitions are well known. The Facebook parent is set to launch a new policy in the Metaverse Standards Forum to develop the metaverse as an independent commercial platform aimed at creating new economic opportunities. Such policies will help recognize the need for decentralized systems and build collaboration between the public and private sectors.
Per META, the metaverse will be worth $3 trillion by 2031. Big cities like Dubai, Seoul and Taiwan are planning to take advantage of the recent boom in metaverse popularity. Metaverse is also offering new opportunities for creators to develop new forms of art and entertainment, build more interactive relationships with their audiences and create new economic opportunities for themselves.
Meta is heavily investing in AI technology, which will help build the metaverse as a commercial virtual reality independent of the real world. Meta recently launched its first high-end virtual reality headset, Meta Quest Pro, at the Meta Connect event.
Meta collaborated with NVIDIA NVDA to build an AI research supercomputer, helping META AI researchers to build different AI models crucial for creating the metaverse. NVIDIA is looking to turn its leading position in supplying the computing hardware for the metaverse into a set of software tools for creating and selling content within virtual worlds.
The Zacks Consensus Estimate for current-year earnings has remained steady at $8.96 per share over the past 30 days.
Microsoft Paves Way for Metaverse Through Teams, Gaming
Microsoft aims to become the go-to-work software provider in the metaverse. To build the metaverse, Meta Platforms has partnered with PyTorch foundation co-founder Microsoft to bring new work and productivity tools to Meta Quest Pro and Meta Quest 2 next year. These include apps like Microsoft Windows 365 and Microsoft Teams and the ability to join a Teams meeting from inside Meta Horizons Workrooms.
The company’s Mesh for Microsoft Teams can be regarded as a gateway to the metaverse and used in a standard laptop or smartphone. The first step most users of Mesh for Teams will take is to join a standard Teams meeting as a customized avatar of themselves instead of as a static picture or on video. Organizations can also build immersive spaces – metaverses – within Teams.
Microsoft is set to acquire Activision Blizzard in an all-cash deal for $68.7 billion to competitively enter the world of gaming in the metaverse. Microsoft’s strategic plan to buy Activision has helped it become the third-largest gaming company in the world and provided it with the expertise to claim its stake in the multimillion-dollar metaverse market.
Furthermore, Microsoft’s Xbox gaming system can be used to provide users access to the metaverse.
The Zacks Consensus Estimate for current-year earnings has remained steady at $9.54 per share over the past 30 days.
Roblox Metaverse Creates a Mark Amid Rising Competition
In a virtual world, independent of AR and VR technologies, the Roblox Metaverse is an early entrant in the Metaverse. It has all the basic features that the audience expects from the Metaverse, ranging from surreal virtual world experiences to a cryptocurrency-based economy.
Roblox metaverse is accessible on smartphones and other mobile devices without the need for VR headsets. Therefore, it is definitely easier to access and fun to play with. Top-grossing games, which witnessed millions of visits include Blox Fruits, Shindo Life, Pet Simulator X, Sonic Speed Simulator, King Legacy, Gacha Online and Livetopia.
The Roblox Studio is the company’s proprietary engine, which allows its creators to build virtual worlds and games. These creators are also allowed to publish their purchasable in-game items. All users are allowed to purchase in-game items but only a few members of the Roblox Metaverse are allowed to sell them through their premium membership.
Events such as concerts and ceremonies are the backbone of the economy of the Metaverse. The Roblox Metaverse aims to organize events, which are suitable for its user base, which consists of children under 16 years of age in majority. These events can have different objectives, such as brand endorsements and fundraisers.
Celebrities and rappers like Lil Nas X and David Guetta have already conducted concerts for the Roblox Metaverse.
To top it, RBLX already boasts its own digital currency, Robux, which has more than 50 million daily active users.
The Zacks Consensus Estimate for Roblox’s current-year earnings has remained steady at a loss of $1.58 per share over the past 30 days.
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