In 2 sentences
- Nvidia’s Omniverse Metaverse platform is already gaining momentum.
- Unity Software could be one of the biggest winners of the Metaverse.
It will be years before the Metaverse becomes what many hope it will be. A lot of development work is still needed to make it happen, including software and devices.
In the meantime, however, some companies stand to benefit from the early stages. Here are two Metaverse stocks in particular that could make you richer in 2022.
Mark Zuckerberg, CEO of Metaplatforms (formerly known as Facebook) specifically mentioned one name earlier this year when discussing other companies that could be big winners in the Metaverse. That name alone was Nvidia (WKN: 918422). While Meta Platforms won’t be generating significant revenue from its Metaverse efforts anytime soon, Nvidia will.
Zuckerberg spoke about Nvidia in the context of the graphics chips needed to run virtual reality applications in the Metaverse. He’s right that this should be a huge long-term growth market for Nvidia. But the chipmaker also has a big opportunity in the near future.
Nvidia’s Omniverse is already gaining momentum. Omniverse is a collaborative 3D design and simulation development platform. Large companies like BMW and Siemens Energy are using Omniverse to develop digital twins of their factories. Studios use the platform for virtual production. Architectural and engineering offices use them for building planning.
Another major opportunity for Omniverse is its Avatar platform. Omniverse Avatar allows designers to create interactive assistants powered by artificial intelligence (AI). These avatars could be used for almost any customer service interaction. Nvidia CEO Jensen Huang estimates the potential market for Avatar at nearly $40 billion. To put that number into perspective, Nvidia had $24.3 billion in revenue over the past 12 months.
Sure, this tech stock looks pricey, with shares trading at nearly 59 times forward earnings. However, Nvidia’s growth prospects warrant a higher rating. Even after the stock has more than doubled this year, it should still be a winner in 2022 and beyond.
2. Unity Software
unit software (WKN: A2QCFX) stands out as another company that could benefit from the Metaverse sooner rather than later. During the days of the gold rush, the biggest winners were those who sold picks and shovels to gold diggers. Unity is essentially a pick and shovel vendor for the Metaverse and VR applications in general.
The company is currently recognized as the leading platform for real-time interactive 3D content development. Nearly 65% of the world’s top 1,000 mobile games were developed using Unity software.
Unity CEO John Riccitiello envisions his company achieving similar dominance in Metaverse content. On Unity’s third quarter conference call, he said:
“We estimate that 60, 70, 80 percent of customer-created content is created with Unity. That’s because one industry after another is entering the metaverse, whether it’s a car configurator or a buying operation.
Although it will take several years to fully build the metaverse, efforts are already underway. Unity should be able to earn money from the early stages of the metaverse.
The stock’s performance has been disappointing in 2021 and stocks are now slightly lower than they were in early January. One of the main reasons for this decline is that Unity’s valuation skyrocketed too quickly in 2020. However, with developers needing the equivalent of a pick and a shovel to build the Metaverse, Unity could recover in the new year.
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Keith Speights owns Meta Platforms and Nvidia. The Motley Fool owns shares of and recommends Meta Platforms, Nvidia and Unity Software, and recommends BMW. This article was published on December 17, 2021 on Fool.com and has been translated for our German readers.