The recent stock market sell-off has taken attention away from several of the world’s most prominent cultural and technological megatrends. But those trends are still developing, offering investors a chance to capitalize on them despite the commotion.
The metaverse is another fascinating trend to incorporate. It’s a market that Bloomberg Intelligence predicts will increase at an annual rate of 13% between now and 2024, when it will be worth about $800 billion.
Let’s take a look at two underperforming names with at least a minor stake in the metaverse industry. Of course, these little positions might develop into significant moneymaking opportunities as the metaverse market matures.
Nvidia is a graphics processor manufacturer that uses computers to connect to computer monitors. The same technology also drives a number of artificial intelligence projects. But the metaverse? What role can this firm play in helping to construct the global virtual meeting places?
It’s a rather simple fit. The metaverse isn’t simply a network of computers, but also a visual connection among metaverse users. This world must be able to deliver computer-generated imagery to a pair of goggles worn by a user instantly and efficiently in order to be successful. Nvidia’s graphics card know-how is ideal for the job.
In fact, it already has a program for that. It’s called Omniverse. The firm describes Omniverse as “an easily extensible platform made for 3D design collaborations and scalable multi-GPU, real-time, true-to-reality simulation,” and it was introduced in late 2020.
The goal of the Omniverse is for it to be more collaborative than enjoyable, and for it to function as a training and/or prototyping tool. Early adopters were businesses interested in creating a virtual product or process rather than putting their money into something that might not turn out exactly as planned. Nothing essential has been said, however the technology may be developed further and used for more entertainment-oriented purposes.
It’s a tiny fraction of Nvidia’s revenue mix these days, so small that the firm does not even report it separately. In light of this, Nvidia isn’t really a metaverse stock.
That is changing, though. Nvidia revealed Meta Platforms in January, when the firm formerly known as Facebook and the company perhaps leading the metaverse charge acquired 16,000 Nvidia-produced A100 processors designed from the ground up to handle AI workloads. These extra firms are more likely to help Nvidia shares rebound from their present slide sooner rather than later.
Nvidia’s rivals are also on the defensive. Microsoft’s stock price has dropped 27% this year, driven down by the market’s bearish mood. When investors learn that this firm’s revenues are still anticipated to rise 18% in 2018 and 14%) next year (because the world isn’t ready to give up its computers or computer software), however, the selloff might be reframed as a buying opportunity.
Microsoft’s entrance into the metaverse race is similar to Nvidia’s, although it isn’t quite the same. While Nvidia’s Omniverse is primarily a testing platform, Microsoft Mesh is a turn-key product designed to enable users of Microsoft Teams to interact with one another virtually. Mesh may help coworkers collaborate on product development, but the company claims its primary objective is “to facilitate ‘eye contact, facial emotions, and gestures,’ so that your personality shines through.” The firm is also developing the user technology required to make the most of Mesh. Its HoloLens is a pair of augmented reality glasses rather than full-fledged immersive goggles designed to assist team members in seeing and discussing manufacturing, engineering, and even healthcare issues at the same time.
Microsoft’s more recent Xbox gaming consoles are already capable of providing a virtual reality experience with third-party VR goggles, however both platforms are currently intended for businesses rather than individual consumers. However, it is not implausible that the underlying technology will eventually get into the hands of consumers in order to broaden its usage scenario. It would be a pretty short leap to connect the two different platforms into a metaverse-themed service.
Microsoft’s current metaverse revenue, like that of Nvidia, is so small that it isn’t even mentioned in its quarterly filings. Also like Nvidia, however, this isn’t always a bad thing. Microsoft’s software and cloud computing earnings are expected to start a resurgence rally well before the metaverse initiatives begin to produce significant results.