2 Monster Metaverse stocks to buy and hold for the next decade

Web 3.0 is widely regarded as the next frontier in internet technology, making the metaverse a golden macrotrend for retail investors. The metaverse refers to an easily scalable virtual reality or real-time mixed reality world, comprising multiple interoperable, immersive and interactive 3D environments. The Bulls expect the Metaverse to change the way people work, study and play by allowing the synchronous participation of an unlimited number of users. The metaverse should also keep all relevant information about payments, identity, and history during user sessions.

Many dominant tech players are making significant investments in the metaverse. However, Nvidia (NASDAQ: NVDA) and Matterport (NASDAQ: MTTR) have an advantage over other potential entrants and play a major role in building the infrastructure supporting the metaverse. Let’s take a look at why these two stocks are compelling long-term choices for retail investors looking to capitalize on the future of the metaverse.

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1. Nvidia

Representing 83% of the global discrete graphics processing unit (GPU) for PC market share, semiconductor leader Nvidia is poised to deliver the parallel processing power (multiple computations at the same time) needed to support loads huge and complex workloads based on artificial intelligence. for the metaverse.

The company’s high-end GPUs are already in high demand in the gaming industry, primarily for their ability to render ultra-realistic graphics. Along with GPUs, the company also has a data center-focused Grace central processing unit (CPU) and a Bluefield data processing unit (DPU) in its hardware portfolio. These next-generation hardware technologies are expected to play an important role in the evolution of the metaverse.

Nvidia also offers a scalable software platform called Omniverse that allows creators and engineers to collaborate virtually and create physically accurate 3D simulations of objects in real time, which will be a powerful tool in developing the metaverse. The platform already has immediate applications in areas such as virtual collaboration between 3D designers working on different software platforms and working remotely. Nvidia also sees important use cases for Omniverse in creating digital twins (digital simulations) for city planning, warehouse optimization, and the automotive industry.

The Metaverse will undoubtedly be a huge opportunity for Nvidia in the years to come. But even without the Metaverse, the company is a very profitable semiconductor business thanks to huge tailwinds in the games and data center segments. The company’s last twelve-month (TTM) revenue grew 64.3% year-on-year to $ 24.3 billion, while TTM’s net profit climbed 114.5% year-on-year to $ 8.2 billion. The company has a strong balance sheet with $ 19.3 billion in cash and $ 11.8 billion in debt.

Nvidia’s share price more than doubled last year. Still, the stock is well positioned for even higher payouts, as the company’s GPUs remain in high demand in growing markets such as autonomous driving, cloud computing and gaming.

2. Matterport

Matterport is another metaverse stock that deserves long-term consideration. The company allows users to create digital twins or realistic 3D simulations of physical spaces such as homes, offices and commercial real estate with an application powered by artificial intelligence. To date, the company has created simulations for 18 billion square feet of space.

Matterport rose to prominence after entering into partnerships with tech giants such as Amazon (NASDAQ: AMZN) and Meta-platforms (NASDAQ: FB). Amazon made Matterport’s digital twin capabilities available on Amazon Web Services (AWS) and together they created a digital twin solution for Internet of Things (IoT) devices, smart buildings, manufacturing, and industrial customers. .

Meta Platforms also uses Matterport’s 1,000 high-resolution 3D simulation models of a range of physical spaces to teach robots to interact with the physical world. After these deals, investors and analysts on Wall Street have a firm belief that Matterport will play a major role in creating the metaverse.

Matterport’s revenue grew only 10% year-over-year in the third quarter (ending September 31) to $ 27.7 million. However, the company’s revenue mix is ​​increasingly shifting towards the higher margin software subscription business. The company saw a 116% year-over-year growth in subscribers to 439,000. Matterport is not yet profitable (which is not unusual given that technology start-ups are growing. usually focus on market share first). However, that could change once companies realize the business potential of digital twins and more subscribers convert to paying customers.

Matterport’s digital twin technology currently has several applications in the real world. In real estate, brokerage houses and real estate portals are using digital twins to run 3D virtual tours to improve online engagement and visitor conversions. In insurance, digital twins are used to document and keep records about the condition of a property, which can then be used for claims management.

Matterport’s annual income rate is currently only $ 111 million. The company is targeting an addressable market for the digitization of the built world, estimated at $ 240 billion. Much of the current hype around this stock, however, centers around its potential for future growth in the Metaverse, which comes with significant execution risk. Yet, given the many under-explored applications of real-world 3D simulations, I believe Matterport may reward patient investors with attractive returns over the next decade.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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