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The metaverse is here … or at least it will be soon. Let’s analyze the best metaverse stocks and see how your portfolio can benefit from technology’s next chapter.
Best Metaverse Stocks: Quick Background
The “metaverse” is the next iteration of the internet that refers to the convergence of physical, augmented, and virtual reality in a shared online experience.
The individual will be present in the metaverse, in real-time, and have complete agency over their actions.
Economies will exist as they do in ‘real-life,’ and people (or their avatars) will be able to create value, whether that be digital goods, services, content, etc.
The realized metaverse will be far more than a virtual world — it will unlock the internet’s true potential in ways that we cannot yet fathom.
The concept of the metaverse is new enough that its definition is still being fleshed out.
One’s image of the metaverse may differ from the next, but the definition of the people building it are the ones worth noting.
Ready Player One and Snow Crash are good examples of the metaverse if this section didn’t make sense. Or read Matthew Ball’s essay that brought the metaverse to the mainstream.
How to Invest in the Metaverse
It’s unlikely that a single company will build the metaverse given the technological hurdles and financial rewards of doing so.
The metaverse must be immersive to the degree that it is preferable to meet in a given instance or for a specific use-case. Achieving this will require technology from a variety of areas.
It takes a village (or a Valley?) to build the metaverse.
An actualized version of the metaverse will require high-performance computing, data services, next-gen connectivity, virtual platforms, digital currencies, and identity services, among countless other technologies.
We’ll group the investable assets involved in these areas into four categories: Big Tech, Computing, Gaming, and Digital Assets.
Best Metaverse Stocks: Big Tech
- Meta Platforms (FB)
- Microsoft (MSFT)
- Alphabet (GOOG)
- Amazon (AMZN)
- Apple (AAPL)
We expect Big Tech, also known as the FAAMG stocks, to do most of the heavy lifting. They have the talent and resources necessary to create the infrastructure for the metaverse.
Their primary revenue streams (platforms, Search, software, cloud computing) not only subsidize their metaverse efforts but will serve as crucial components in the metaverse.
Additionally, they have the luxury of long time horizons and are allowed to ‘fail’ in ways that would eviscerate less-established companies. They will fail until they succeed.
The ‘disruptor’ class of companies will make features for the metaverse, but Big Tech will create the foundation.
#1. Meta Platforms (FB)
Mark Zuckerberg revealed the next chapter of Facebook in June 2021, saying that Facebook will transition from being perceived as a social media company to a metaverse company “over the next five years or so.”
A few months later, he changed the name of the company to Meta.
It was a surprise to many, but the company had been building the foundation for the metaverse shift for quite some time.
It purchased Oculus VR in 2014, in what will serve as the portal into the metaverse.
An economy will exist in the metaverse — good thing Meta has created a digital currency for transactions.
And what company understands avatars better than Meta? Billions of people have already created avatars of themselves on Instagram.
Faceb0ok was responsible for merging the physical and digital worlds. Who is more capable of leading the next transition?
#2. Microsoft (MSFT)
Microsoft’s cloud computing platform Azure makes metaverse apps possible. Cloud and edge computing are the foundation of the company’s metaverse technology stack.
Microsoft Executive Sam George recently wrote:
“In fact, we’re uniquely positioned as a company to bring this entire stack together, and our bold ambition is to make this stack more connected and more seamless over time so you can easily move up and down the layers that enable metaverse applications.”
George specifically refers to Azure Digital Twin, a layer in Microsoft’s metaverse stack that can model any asset, system, or entire environment and keep the digital twins live and up-to-date with Azure IoT.
Hypothetical example: A Ford executive wants to determine potential bottlenecks at a facility in Detroit. Instead of getting on an airplane and flying to Detroit, he taps into the metaverse and is instantly on the ground floor of the factory. Real-time digital twins of machines are operating in front of him with analytics projected above them of their energy cost per hour, maintenance costs, and output rate. Thanks to Azure Digital Twin, the executive can make decisions with confidence because he knows these digital representations are accurate.
Synchronization between the digital and ‘real’ world is imperative for the metaverse’s integrity.
To be clear, Azure Digital Twins is just one layer of the company’s metaverse technology stack.
Few companies are more prepared for the metaverse than Microsoft.
#3. Google (GOOG)
Google’s access to the world’s data and its AI capabilities make it a compelling metaverse stock.
Building for the metaverse is a perfect example of why Google restructured in 2015. Forming the parent company, ‘Alphabet’ allowed the company to pursue new technologies without taking away from Search and the advertising business.
A not-so-secret-anymore program called Google X, now known as X Development, began at Google in 2010 with the intention to “improve life and commodities by a factor of 10.”
The Moonshot Factory essentially acts like a startup within the walls of Alphabet. Since its founding, X has incubated hundreds of different moonshot projects.
One of these moonshots was Google Glass, a VR-enabled pair of glasses that ultimately ‘failed.’ However, it was more of a miscommunication with the public than a failure.
Google’s interest in VR and AR is just the tip of the iceberg.
The company is arguably the furthest along in autonomous driving capabilities.
An offshoot of Google called DeepMind just created an AI system that can predict a protein’s 3D structure from its amino acid sequence. Google chose to release the database to the scientific community to accelerate scientific research.
But let’s not forget Google’s primary revenue drivers: Search, YouTube, and Cloud.
Data, entertainment, and connectivity will be vital to the internet’s next chapter. I mean, “Google” and the “internet” have been synonymous for decades.
Given the company’s ambition, its AI capabilities, and finger-on-the-pulse advantage, it’s hard to imagine a world where the metaverse exists without Google playing a significant role in it.
#4. Amazon (AMZN)
An actualized metaverse isn’t possible without computing components and cloud solutions. This is where Amazon comes in.
Amazon Web Services controls over a third of the public cloud market. It provides cloud computing services to most of the companies in this article.
Companies that want digital real estate in the metaverse will have to pay Amazon for it — similar to how they pay Amazon to exist in Web 2.0.
An example of this dependence is evident in the gaming industry. More than 90% of the world’s biggest public game companies are using AWS.
Later, we’ll discuss the gaming industry’s pivotal role in unlocking the metaverse. This intersection between the metaverse, gaming, and AWS will be a dollar-printing extravaganza for Amazon.
However, there will be more options in a decentralized space, and we expect Ethereum or an Ethereum-like blockchain to provide some form of infrastructure in conjunction with Amazon.
We believe that Amazon and Google will similarly contribute to the metaverse.
It might not announce an explicit ‘metaverse’ strategy like Facebook and Microsoft, but it will nonetheless play a critical role.
Amazon’s existing products and services are already blending the physical and digital worlds.
As the rate of blending accelerates, Amazon will benefit accordingly.
#5. Apple (AAPL)
We’re including Apple in here to round out the best FAAMG stocks, but it’s unclear which role the company will play in the metaverse.
The App Store’s monopoly on apps is threatened in a decentralized Web3 environment.
Unity Software CEO John Riccitiello recently wrote:
“In a world filled with creators, inventors, and innovators, the metaverse simply can’t exist as a walled garden, and the notion that any single company can chase that vision is one filled with hubris.”
Apple is behind Facebook and Microsoft in the AR and VR device market too, which sets them further back on creating a virtual platform in the metaverse.
But you’d be a fool to bet against Apple — it has delivered each time we’ve asked, “what’s next?”
From the iPad to the AirPods and now the AppleWatch, the Apple ecosystem expands beyond the iPhone and Mac suites.
Hardware devices will be necessary in the early stages of the metaverse, and we wouldn’t be surpassed if Apple hits yet another home run in this market.
Best Metaverse Stocks: Computing
- Nvidia (NVDA)
- Advanced Micro Devices (AMD)
- Qualcomm (QCOM)
- TSMC (TSM)
If Big Tech is providing the infrastructure to the metaverse, then the computing and semiconductor stocksin this section provide the infrastructure to the infrastructure of the metaverse.
As previously mentioned, the best version of the metaverse is one where it is completely immersive. Next-gen graphics will be essential.
Nvidia is arguably the best ‘pure-play’ metaverse stock you can buy. Its core business offerings power the artificial intelligence and supercomputing necessary to make this a reality.
Consider buying TSMC (TSM) if you want to get even more granular. This company actually makes the chips that Nvidia and AMD sell.
Qualcomm (QCOM) is the final name on this list and is slightly different from the other players in this category.
Qualcomm creates semiconductors, software, and services related to wireless technology. Its chips provide efficient computing power for mobile applications and products such as smartphones, robotics, VR, and AR.
Best Metaverse Stocks: Gaming
- Unity Software (U)
- Roblox (RBLX)
- Sea (SE)
- Zynga (ZNGA)
Participants in the gaming industry understand the metaverse better than anyone else.
They’ve been building virtual worlds for decades and have made countless iterations on what works and what does not — these companies are the portal into the metaverse.
The increase in in-game engine platforms, like Roblox (RBLX), Unity Software (U), and Epic Games has accelerated this trend by empowering users.
These platforms allow users to not only play video games but easily create them with no-code programs.
The user has gone from playing the game to creating the game and eventually will be in the game.
Innovation is shrinking the bandwidth. We’ll look back and laugh at the idea of holding a controller to play a game.
Our definition of ‘video game’ will probably change, too. As the bandwidth shrinks and becomes more immersive, we will stop looking at them as ‘games’ and more like ‘experiences.’
Best Metaverse Stocks: Digital Assets
- Square (SQ)
- PayPal (PYPL)
Crypto and the metaverse were made for each other.
We believe that money is a technology that could undergo dramatic changes in the shift to Web3. Therein lies opportunity.
NFTs could be used to prove ownership of digital items.
Bitcoin’s technology and monetary policy could thrive in a predominantly digital space and decrease the need for the Federal Reserve.
Layer 2 technologies like the Lightning Network would enable fast and secure value transfers between two parties without the need for third-party oversight.
These applications would be accretive for the price of BTC and ETH.
As more developers build on their respective networks and create valuable offerings, more users will want to use those valuable offerings.
To do so, they’ll need to have the blockchain-native currency to pay for those offerings, so they’ll buy bitcoin the asset.
The supply side of bitcoin is fixed, so sustained or increased demand for the asset should cause its price to go up.
And PayPal (PYPL) is going to do whatever Square does in the coming decade. It has the user base and resources that allow it to draft off Square’s innovation without penalty, i.e., it can be ‘second’ to new products and services
Regardless of the currency being exchanged, the Cash App and PayPal’s Venmo will probably support it in the metaverse.
Other Metaverse Stocks to Consider
- Disney (DIS)
- Snapchat (SNAP)
- Zoom (ZM)
- Twitter (TWTR)
- CrowdStrike (CRWD)
- Okta (OKTA)
Most of the technologically capable companies will benefit from the next era of the internet, so this honorable mention list is not exhaustive by any means.
But the diversity of the names in the list reveal the second and third-order beneficiaries of the metaverse.
Disney (DIS) can digitize its parks and unleash the world’s most potent IP library in virtual worlds.
Snapchat’s (SNAP) AR, VR, and essential messaging services will transition well into the metaverse.
Do we really think that Zoom (ZM) will stop innovating at 2D video-conferencing?
Twitter (TWTR) is flirting with micropayments for content in a way that screams “Web3.” It may also pursue more non-Bitcoin projects after Jack Dorsey stepped down as CEO.
The metaverse could catalyze a shake-up amongst the FAAMG names, but the strongest tech companies today are going to lead and benefit from this transition, just to varying degrees.
Alternatives to Metaverse Stocks
However, an ETF exclusively focuses on the metaverse: The Roundhill Ball Metaverse ETF (META).
This is one of six ETFs offered by Roundhill that focuses on the investment themes of the future, such as eSports, streaming, sports betting, and several other areas.
As you can see, there are plenty of ways to get exposure to the metaverse.
Bottom Line: Best Metaverse Stocks
We’re at an exciting point on the metaverse S-curve. We have a name for it, companies are building it, but the realized version of it is yet to exist.
We expect the dawn of the metaverse to have more profound impacts than the dawn of the internet.
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best metaverse stocks.