In this piece, we will take a look at the 11 most promising metaverse stocks to buy according to hedge funds. If you want to skip our overview of what a metaverse is and the latest news, then take a look at the 5 Most Promising Metaverse Stocks To Buy.
The metaverse is a new technological sector that aims to transport humans into the digital realm. Ever since the personal computer became popular in the 1990s, and 3D graphics cards started to make their way into the market during the same time period, humans have used a virtual experience for their entertainment in the form of video games. In fact, the global video game market is worth a whopping $224 billion as of 2022 end, and it is estimated to grow at a compounded annual growth rate (CAGR) of 10.5% to be worth $610 billion by 2032. Safe to say, digital experiences are here to stay, and as technology advances, they are also evolving with time.
While traditional video games limit a player to looking at a screen or using a headset, the metaverse seeks to transport them into the digital realm. While there are several different definitions for a metaverse, the simplest is that it is a 3D environment that allows people to have lifelike, yet digital, experiences. The metaverse caught the public attention during the coronavirus pandemic, as people were forced indoors and had to work and play from home.
This growth in consumer interest did not go unnoticed by the finance industry and investors. Data from Crunchbase shows that in 2021, metaverse companies doubled their capital raises to $10 billion. This figure further blossomed in 2022 when $120 billion flew into the sector during the first eight months of the year according to data from the consulting firm McKinsey. And despite the general pessimism in the industry surrounding the technology, McKinsey is also quite optimistic about the metaverse's future as it expects that the sector can generate as much as $5 trillion in value by 2030.
Building on the flow of investments in 2022, 2023 has been a busy year for the metaverse. There are few companies right now with the software and computing power to operate such a platform, and one of these is the San Mateo, California based video game developer Roblox Corporation (NYSE:RBLX). Roblox made a splash in November 2023 when it announced its Roblox Connect platform. Through Roblox Connect, Roblox players will be able to call and communicate with their friends in the digital realm. This is a unique service, and the announcement also appears to have a positive impact on the firm's shares that have struggled in 2023. Between January and the end of the first week of November, Roblox's shares lost 16%, but since it announced Roblox Connect, the stock is up by a healthy 17% to mark 6% in year to date gains.
Any mention of the metaverse is incomplete without talking about Meta Platforms, Inc. (NASDAQ:META), the only big tech mega cap company that is extremely bullish on the metaverse. Meta's CEO and founder Mark Zuckerberg has piled in $36 billion into the metaverse, but so far, the money has yielded little results. Nevertheless, its scale does allow it to break in new markets, and Meta's launch of the Quest 3 virtual reality headset in October did stimulate the declining VR market to an extent. However, data from CNBC shows that as of late November, VR headset sales in America dropped to $664 million for a 40% drop. Seems like the metaverse will take some time to catch up with users.
Commenting on the Quest and the metaverse, here's what the Meta chief had to say during the firm's latest earnings call:
Now finally, in addition to AI, our other major long-term focus is the metaverse. And we just launched Quest 3, our most powerful headset yet, at a very competitive price.
Today we'll look at some promising metaverse stocks according to hedge funds with the notable picks being Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
11 Most Promising Metaverse Stocks To Buy According To Hedge Funds
A patient wearing a virtual reality headset, experiencing the immersive world of virtualized healthcare.
Our Methodology
As part of the process of compiling the most promising metaverse stocks according to hedge funds, we ranked the top 30 holdings of the Roundhill Ball Metaverse ETF by the number of hedge funds that had bought their shares during Q3 2023 and picked the top stocks.
11 Most Promising Metaverse Stocks To Buy According To Hedge Funds
ASML Holding N.V. (NASDAQ:ASML) is the only company in the world capable of making high end chip manufacturing machines, making it indispensable to powering up the metaverse. The shares are rated Buy on average but the analyst average share price prices a downside since it has a value of $686.17.
During Q3 2023, 57 out of the 910 hedge funds covered by Insider Monkey's research were the firm's shareholders. ASML Holding N.V. (NASDAQ:ASML)'s largest shareholder is Ken Fisher's Fisher Asset Management due to its $2.8 billion investment.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT), ASML Holding N.V. (NASDAQ:ASML) is a top hedge fund metaverse stock pick.
QUALCOMM Incorporated (NASDAQ:QCOM) is a semiconductor company whose GPUs power smartphones and AR headsets. The firm was at the center of a rather strange analyst note from Morgan Stanley in December 2023 that saw the bank downgrade QUALCOMM Incorporated (NASDAQ:QCOM)'s shares to Hold from Strong Buy but increase the share price target to $132 from $119.
Insider Monkey dug through 910 hedge funds for their September quarter of 2023 shareholdings and found 67 QUALCOMM Incorporated (NASDAQ:QCOM) investors. John Overdeck and David Siegel's Two Sigma Advisors was the firm's biggest investor as it owned a $362 million stake.
The Walt Disney Company (NYSE:DIS) is a well known global entertainment company that operates theme parks and video streaming services. While the firm eliminated its entire metaverse division earlier this year, its Disney+ service offers immersive 3D experiences.
During this year's third quarter, 89 out of the 910 hedge funds profiled by Insider Monkey had held a stake in the company. The Walt Disney Company (NYSE:DIS)'s largest shareholder is Nelson Peltz's Trian Partners due to its $2.6 billion investment.
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Investors In Q3 2023: 107
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's largest contract chip manufacturer. It is a key beneficiary of any positive developments in the metaverse industry since whether it's Qualcomm or NVIDIA, both have to go to TSMC to make their semiconductors.
As Q3 2023 ended, 107 out of the 910 hedge funds part of Insider Monkey's database were Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s shareholders. Out of these, the biggest investor was Ken Fisher's Fisher Asset Management as it owned 30 million shares that are worth $2.6 billion.
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a GPU designer whose products are essential to powering up digital experiences. The firm's shares are rated Strong Buy on average and analysts have set an average share price target of $139.44.
Insider Monkey's third quarter of 2023 research of 910 hedge funds revealed that 110 were the firm's investors. Advanced Micro Devices, Inc. (NASDAQ:AMD)'s largest shareholder is Ken Fisher's Fisher Asset Management since it holds a $2.8 billion stake.
Apple Inc. (NASDAQ:AAPL) is the biggest technology company in the world and its Vision Pro headset literally transports a person inside a computer to interact with apps in real time. These days though the firm is in a bit of trouble as a patent dispute has forced it to stop selling some products in the U.S.
During September 2023, 134 out of the 910 hedge funds surveyed by Insider Monkey had bought and owned Apple Inc. (NASDAQ:AAPL)'s shares. Warren Buffett's Berkshire Hathaway was the biggest stakeholder through a massive $156 billion stake.
Meta Platforms, Inc. (NASDAQ:META), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are some metaverse stocks on the hedge fund radar.
