Metaverse is the latest technology trend that is currently in the early stages of growth, but it is expected to grow in scale in the long run, thanks to its ability to connect people around the world in the 3D virtual world.
Simply put, with the help of mixed reality devices that support both augmented reality and virtual reality, people can work, play, learn, and interact within the Metaverse from the comfort of their home. Not surprisingly, investment in this area is expected to grow rapidly over the next few years. Third-party quotes Metaverse The market will grow at an annual rate of nearly 48% by 2029 and could reach just over $ 1.5 trillion at the end of the forecast period.
Nvidia ((((NVDA 4.80%). When Microsoft ((((MSFT 1.42%). There are two companies that can help investors win big from this trend. Let’s see why Metaverse can send stocks of these tech giants in Bull Run.
Nvidia is in a position to benefit from the Metaverse in a variety of ways. In fact, graphics specialists are already taking advantage of this new technology trend. Meta platform‘ ((((FB 1.10%). A supercomputer that is supposed to support the growth of the Metaverse. Meta’s artificial intelligence (AI) Research SuperCluster (RSC) supercomputers are powered by over 6,000 Nvidia graphics processing units (GPUs). When Meta completes the expansion of the same thing, the supercomputer will eventually have 16,000 Nvidia GPUs.
Meta believes that the work done at RSC will pave the way for the next major computing platform: Metaverse technology, where AI-driven applications and products play a key role. increase. This is ideal in the long run for Nvidia GPUs as data centers, servers and supercomputers need to be upgraded to address real-time delivery of 3D content to millions of users around the world. Means a surge in.
But that’s not the only opportunity for Nvidia in the Metaverse. In addition to chips, the company predicts that Metaverse will also generate strong demand for enterprise software. According to Nvidia, hardware and software opportunities together represent a $ 300 billion addressable market.
Now we’ve seen how Nvidia tends to profit from the Metaverse on the hardware side. The good part is that the software opportunity is also taking off. Known as Omniverse, Nvidia already has a scalable development platform that allows creators and developers to create virtual worlds, especially digital twins (virtual replicas of real-world physical objects and space).
In addition, Nvidia claims that more than 400 companies value the adoption of the Omniverse platform.Car giant BMW I used the omniverse to create a factory digital twin. Ericsson Use the platform to simulate and visualize your 5G wireless network before launching it.
All this shows that Metaverse can help Nvidia’s business work well, which can play a key role in driving Nvidia’s already strong pace of growth. Nvidia finished 2022 (ending January 30th) with sales of $ 26.9 billion, up 61% year-on-year. The Metaverse opportunity shows that it is damaging the surface of the great opportunity.
Analysts expect Nvidia to record an annual revenue growth rate of 30% over the next five years, and by adding opportunities such as the Metaverse, Nvidia will grow at a faster pace and stock in the long run. There is a possibility of supercharging.
Microsoft is another tech giant that is on track to win from the Metaverse in a variety of ways, including profitable video gaming spaces.
Earlier this year, Microsoft announced an acquisition Activision Blizzard With a transaction worth $ 68.7 billion. While announcing the acquisition, a Microsoft press release said, “The acquisition will accelerate the growth of Microsoft’s gaming business across mobile, PC, console and cloud, and provide the Metaverse building block.”Microsoft is already noteworthy Have a solid foundation In the gaming business, thanks to the Xbox console, Game Pass video game subscription service, and a large library of game titles thanks to ownership of several game studios.
This puts Microsoft in a strong position to take advantage of the opportunities for Metaverse games, which are expected to grow at a great pace. Cryptocurrency wealth management company Grayscale estimates that the virtual game world could generate $ 400 billion in revenue by 2025, compared to $ 180 billion in 2020. With almost all of the revenue from virtual games generated by in-game spending, Activision’s 400 million user base goes to a large pool of players who can drive incremental spending to drive the growth of the gaming business in Metaverse. Microsoft access.
Beyond the game, Microsoft has already jumped into the Mesh for Microsoft Teams metaverse. Built on top of the popular Microsoft Teams collaboration tool, this product allows people from different locations to attend meetings in immersive 3D space via virtual avatars. With a user base of over 250 million for Microsoft Teams, the company can cross-sell Metaverse collaboration tools to a huge number of users.
Meanwhile, Microsoft also plans to use Metaverse applications in the industrial sector, which plans to take advantage of the growing demand for digital twins. Given that the digital twin market is expected to generate $ 61 billion in revenue by 2027, according to Mordor Intelligence, this could be a wise move from Microsoft.
Company outlook Other lucrative markets Not surprisingly, Microsoft has continued to grow tremendously over the long term, including cloud computing and video games. In the third quarter of 2022 (until March 31), the company’s revenue was up 18% year-on-year to $ 49.4 billion, while adjusted revenue was up 14%.
Analysts expect Microsoft’s revenue to grow at 16% annually over the next five years, but it’s better than that, thanks to profitable growth drivers such as the Metaverse. Don’t be surprised. So buying Microsoft stock seems easy for now. This is because they are trading at 26x trailing revenue, with an average of 5 years discounted to multiples of 37.