Which Leading Tech Stock will ‘Win’ the Race for the Metaverse?

The metaverse is an emerging technology that’s forecast to become such a disruptive influence that tech giants are already scrambling to rebrand in a bid to navigate the sea of change. Still in its very early stages, there’s very little we know about the metaverse and just how it will impact our lives. However, this hasn’t stopped companies from gambling big on a future of VR interconnectivity. With this in mind, let’s take a look at the stocks that may be best positioned to become market leaders in the race for the metaverse. 

So, which companies are set to be affected by the metaverse? Many analysts anticipate that the impact of the metaverse will be extremely far-reaching and culturally transformative. We’ve recently been treated to videos of how supermarket chain Walmart anticipates that the metaverse will enable consumers to virtually shop inside digitally rendered supermarket isles with a comprehensive overlay of metadata and a virtual checkout process to boot. 

Although there’s no universally agreed-upon definition of what the metaverse is, it’s widely regarded as a natural progression from the age of the internet. 

“The Metaverse is an expansive network of persistent, real-time rendered 3D worlds and simulations that support continuity of identity, objects, history, payments, and entitlements, and can be experienced synchronously by an effectively unlimited number of users, each with an individual sense of presence,” explains Mathew Ball, author of The Metaverse Primer. 

(Image: Market Research Future)

As we can see from the chart above, the metaverse will be an extremely lucrative prospect to the businesses that can crack the market early on - with forecasts suggesting a CAGR of around 41.7%. 

So which companies could win the metaverse space race? Let’s take a look at three leading candidates:

1. Meta Platforms Inc (NASDAQ: FB)

Despite a recent drastic drop, Meta deserves consideration for the company’s proactive approach in rebranding from its Facebook roots in a bid to fully immerse itself into the metaverse. 

“It is likely that "the tide will raise all boats" and Facebook's actions have allowed many companies to discover new products or sales channels, for the most part, the strong hype around other companies was due to their size, given that FB is a tech giant, then for smaller companies like Roblox or Unity, the metaverse creates more accelerated growth opportunities, which was momentarily reflected in the price and which is why there was such interest from investors. As the metaverse unfolds in 2022, companies like Roblox or Unity have a lot of work ahead of them.” said Maxim Manturov, head of investment advice at Freedom Finance Europe. 

As a well-established FAANG growth stock, Meta is extremely well-placed to invest big in the metaverse and potentially reap the benefits of an emerging market.

2. Micron Technology Inc (NASDAQ: MU)

With a growth rate of 306% over the past five years and a relatively ‘small’ market cap of $100 billion, Micron Technology may ultimately become a big winner in the race to build the metaverse. 

Shares in the company have rallied significantly in Q4 of 2021 as investors are beginning to realize the upcoming rise in demand for memory chips in the development of the metaverse. 

With the metaverse comes a greater need for storage. "Memory chips constitute a core infrastructure of [the] metaverse,” noted Jeff Kim, an analyst at KB Securities. 

The burden on data that’s set to be caused by the metaverse will require more hyperscale data centers and edge data centers as a means of delivering the huge volumes of data that’s set to be shared across numerous end points in real time. 

The sheer volume of data needed to sustain the metaverse will create a significant level of demand for DRAM (dynamic random-access memory), which could be primarily supplemented by Micron.

3. Microsoft Corporation (NASDAQ: MSFT)

Microsoft has taken a different approach in its bid to build for the metaverse. The tech giants are looking to focus on the world of video games, and its strategic acquisitions of leading video game companies has led to comparisons with Disney’s purchases of Pixar, Marvel, and LucasFilm in the past. 

In recent weeks, Microsoft paid $68.7 million to acquire Activision Blizzard, which has popular titles like Call of Duty, Warcraft, Overwatch, and Candy Crush to its name. The company has bought out 23 game studios in recent years, taking ownership of leading games like Minecraft, Fallout, and Gears of War. 

Microsoft hopes that gaming platforms will “provide building blocks for the Metaverse.” according to CEO and chairman Satya Nadella. 

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Nadella added. 

Microsoft growth has been largely consistently impressive over the past five years, with a price rise of nearly 400% throughout the period with very few significant dips occurring along the way. 

With such little known about what the metaverse will look like when it finally arrives, there is plenty of room for a number of stocks to outperform as they race to establish themselves across what’s an exciting emerging tech landscape.

It’s likely that the metaverse will bring with it numerous investment opportunities for investors, and it’s certainly worth keeping a close eye on how companies are adapting their models to accommodate the metaverse. The prize for winning the race for the metaverse is too tantalizing for tech stocks to ignore.