In this article, we will take a look at the 10 best metaverse stocks to buy according to hedge funds.
What is the Metaverse?
According to McKinsey & Company, the metaverse is the emerging 3-D-enabled digital space that uses virtual reality, augmented reality, and other advanced internet and semiconductor technology to allow people to have lifelike experiences online.
The basic features of the metaverse include a sense of immersion, real-time interactivity, and user agency. Whereas, the full vision of the metaverse encompasses platforms and devices that work seamlessly with each other, the possibility for thousands of people to interact simultaneously, and use cases well beyond gaming. While the phenomenon gained attention in 2021 with internet searches for the term increasing by 7,200%, it seems here to stay. With lockdowns and work-from-home policies in place, the interest in shared virtual environments spiked. The opportunity remains vast with metaverse having the potential to generate up to $5 trillion in value by 2030.
Is the Metaverse Still Alive?
When the tech guru Mark Zuckerberg changed Facebook’s name to Meta in 2021, he clearly drove the metaverse narrative in the world. Although the vision of a digital future of work and recreation became a buzz for a while, other emerging technologies such as Artificial Intelligence decided to dominate the headlines later.
Questions regarding whether Zuckerberg should have transformed a successful social media company into a VR venture have also been asked. In September 2023, BBC reported that his company’s virtual and augmented reality branch, Reality Labs, has lost $21 billion since the prior year. The firm later introduced its social virtual reality space Horizon Worlds. While some users have complained about not having enough people to make it fun, the platform’s monthly users can simply not match the number of people who consume social media like Facebook and Instagram every day.
Although the company’s virtual reality headset and its Horizon Worlds have not gone mainstream after 3 years of the company’s founding, experts argue that the metaverse is still as relevant as ever. On October 2, CNBC reported that Zuckerberg’s metaverse is finally showing signs of life as his company might have found its footing in VR and AR through a different medium, smart glasses. After the firm witnessed early success in the market for smart glasses via a partnership with Ray-Ban, the CEO unveiled the first “fully-functioning” prototype AR glasses, Orion, in September.
“The right way to look at Orion is as a time machine. These glasses exist, they are awesome and they are a glimpse of a future that I think is going to be pretty exciting.”
Although there might be a lack of connection between the metaverse which was the next big thing two years ago and the prevailing tech landscape dominated by AI, some argue that the reports of the metaverse’s death are ‘exaggerated’ and that it is a rather long-term concept to materialize as a digital future for masses.
With that being said, let’s move to the 10 best metaverse stocks to buy according to hedge funds.
Our Methodology:
In order to compile a list of the 10 best metaverse stocks to buy according to hedge funds, we first used stock screeners, ETFs, and online rankings to make an extended list of the relevant companies. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best metaverse stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Metaverse Stocks To Buy According to Hedge Funds
10. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 34
Unity Software Inc. (NYSE:U) serves as the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content. The company empowers creators across industries and globally. Unity’s platform offers a set of software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.
Unity remains in a unique position in a vibrant business. With the growing creation of 3D content in interactive entertainment, the company serves as just the right platform provider to fundamentally change how the next generation of content gets created. Since Unity has the opportunity to change how people think about creating interactive content, it can drive them to make more content by enabling them to do it more efficiently and effectively. Therefore, the management remains optimistic on the long-term value of Unity.
In October, the firm launched Unity 6, the most stable and best-performing version of Unity. Unity 6 is curated to allow the creation of better games built more quickly and efficiently than before. Unity’s third-quarter results exceeded its guidance for both revenue and adjusted EBITDA. Key new customer accounts in the quarter included KLM, the Dutch Airline, which is building, a VR cockpit training application and Deutsche Bahn which built a series of systems, and training simulations in Unity.
With the uniqueness of Unity’s platform and the bright future it looks forward to, the company is a promising metaverse stock to buy. As of Q2, Unity Software Inc. (NYSE:U) is held by 34 hedge funds.
9. Cloudflare, Inc. (NYSE:NET)
Number of Hedge Fund Holders: 39
Cloudflare, Inc. (NYSE:NET) serves as a global cloud services provider that delivers a range of services to businesses of all sizes and in all geographies. With a massive global network spanning more than 330 locations, Cloudflare content delivery network operates within approximately 50 milliseconds of almost 95% of the Internet-connected population globally.
As one of the many technical platforms that tend to support Web3 and the growing metaverse ecosystem, the firm has been trying to mature the technology needed to provide access to Web3 services at a global scale. In this regard, it announced the opening of its private beta for both the Ethereum and IPFS gateways. During this announcement in 2021, the firm declared that it viewed the Web3 and the Metaverse as an ‘entirely new networking paradigm’ and believed that the first complete metaverse could be built entirely on Cloudflare, using systems like Ethereum, IPFS, RTC, and R2 storage.
For its third quarter ended September 30, Cloudflare, Inc. (NYSE:NET) reported revenue of $430.1 million, up 28% year-over-year. While the firm successfully added a record 219 large customers, it hit a new milestone which is 35% of the Fortune 500 being paying Cloudflare customers currently. Additionally, Cloudflare played a profound role in upholding the democratic process by providing its services to hundreds of government websites in more than half of US states while ensuring that cyberattacks didn’t affect the outcome of the 2024 election.
With an extensive content delivery network and cybersecurity solutions catering to the requirements of the metaverse, Cloudflare, Inc. (NYSE:NET) is well-positioned to play a significant role in the metaverse landscape. As of Q2, the stock is held by 39 hedge funds.
8. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 54
Roblox Corporation (NYSE:RBLX) is reimagining the way people come together by offering a platform that enables anyone to create, learn, connect, shop, and express themselves in immersive 3D experiences. Roblox was founded in 2004.
Roblox serves as one of the top online entertainment platforms for audiences aged below 18 based on average monthly visits and time spent. Its community of users and developers drives its popularity purely. The growth trajectory for Roblox is robust as evident from its 88.9 million daily active users, 2.9 million developers, 20.7 billion total engagement hours, and 6 million active experiences, as of the recent quarter. The vision remains even brighter with the CEO expecting the company to become a daily utility for shopping, communication, entertainment, learning, and play, as stated during the RDC 2024.
Roblox Corporation (NYSE:RBLX) demonstrated the strength of its platform in its promising Q3 results. The firm recorded revenue of $919.0 million, up 29% year-over-year. Bookings witnessed an increase of 34% over the year. At the same time, Average Daily Active Users (DAUs) climbed 27% year-over-year while hours engaged were up 29% year-over-year.
Therefore, Roblox is a leading immersive platform for connection and communication. With solid fundamentals, active engagement, and a growing community of both creators and users, the firm remains committed to becoming the world’s largest social platform for play. As of 2024’s second quarter, the stock is held by 54 hedge funds.
7. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 55
Autodesk, Inc. (NASDAQ:ADSK) provides 3D design, engineering, and entertainment technology solutions worldwide. Designers, engineers, builders, and creators across the globe trust Autodesk to help them design and make anything. Autodesk’s Design and Make Platform empowers its customers with the technology to create the world around them. The company’s product offerings are focused in four primary product families including Architecture, Engineering and Construction, AutoCAD and AutoCAD LT, Manufacturing, and Media and Entertainment.
Autodesk serves as a global leader in design and make technology, with expertise across architecture, engineering, design, construction, manufacturing, and entertainment. Revit by Autodesk is a building information modeling software designed for engineers, architects, and builders that enables the creation of virtual models of structures. Revit models can then be transformed into an immersive experience. Through numerous different products designed specifically for building VR and AR 3D animations and buildings, Autodesk is facilitating metaverse construction.
Previously, the firm entered into a strategic collaboration with Epic Games to accelerate immersive real-time 3D experiences across industries, with an initial focus on architecture, engineering, and construction. As members of the Metaverse Standards Forum, the two firms have believed in the value of open-source content creation.
Autodesk continues to enable strong momentum both in absolute terms and relative to its peers. On August 29, Autodesk, Inc. (NASDAQ:ADSK) reported its results for the second quarter of fiscal 2025. Total revenue increased 12% year-over-year. The net revenues by all product families rose over the year. As emphasized by Andrew Anagnost, Autodesk president and CEO, the firm is capitalizing on favorable long-term growth trends such as increases in global reconstruction and infrastructure.
Given the solid momentum across the company’s business and its leading design software for the metaverse, Autodesk, Inc. (NASDAQ:ADSK) is an attractive metaverse stock to invest in. As of Q2, the stock is held by 55 hedge funds.
6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 107
Adobe Inc. (NASDAQ:ADBE) is one of the largest and most diversified software companies globally which focuses on changing the world through personalized digital experiences. The firm empowers everyone to imagine, create, and bring any digital experience to life. Adobe was founded by John Warnock and Charles Geschke in 1982. The firm has three segments including Digital Media, Publishing and Advertising.
Many of Adobe’s existing products such as Photoshop, Illustrator, After Effects, Premiere Pro, and Dimension, are commonly used in the creation of digital content. While the firm has been dominant in the market for two-dimensional content creation, it released a set of new software tools aimed to aid 3D content creation for the metaverse in 2022. During the same year, Adobe Acrobat announced entering the metaverse by introducing immersive document creation, sharing, and e-signing right from any Meta Quest device. Adobe mentioned this move as the new frontier of remote work and collaboration.
Simultaneously, Adobe advanced metaverse with powerful 3D and immersive experiencing by making updates to Adobe Substance 3D, a software suite for 3D content creation which included new plugins and a 3D Materials SDK for developers.
Adobe Inc. (NASDAQ:ADBE) successfully posted record revenue in Q3 2024. The company had a revenue of $5.41 billion in the quarter, up 11% year-over-year. It also delivered cash flows of more than $2 billion. Digital Media segment revenue was up 11% year-over-year while Digital Experience segment revenue climbed 10% year-over-year. The management was optimistic regarding the prospects of future growth considering the massive markets the firm is currently catalyzing.
While Adobe Inc. (NASDAQ:ADBE) has been changing the world through digital experiences for over 40 years and pursues a mission to make the digital world something that everyone can participate in and benefit from, it sees the metaverse as a natural evolution of its mission. The firm ranks on our list of the 10 best metaverse stocks to buy according to hedge funds.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) serves as the high-performance and adaptive computing leader. The firm operates through multiple segments including Data Center, Client, Gaming, and Embedded. For over 45 years, AMD has driven innovation in high-performance computing, graphics, and visualization technologies which serve as the building blocks for gaming, immersive platforms, and the datacenter.
The chip maker made its way into the metaverse when it landed Meta as its customer and stated that Meta would use AMD’s EPYC chips in its data centers. AMD further collaborated with Meta Platforms to make the metaverse a reality. Under this collaboration, AMD’s radio chip Xilinx Zynq UltraScale+ RFSoC enabled the development of multiple Evenstar radio units to expand the 4G/5G global mobile network infrastructure. Additionally, AMD supplies chips to the leading gaming console makers such as Microsoft and Sony which engage in the virtual world. AMD chips power the PS5 and the Xbox Series X.
AMD recorded Q3 revenue of $6.8 billion, up 18% year-over-year. The revenue growth was driven by increased sales of EPYC and Instinct data center products and strong demand for Ryzen PC processors. While Record Data Center segment revenue of $3.5 billion was up 122% year-over-year, Client segment revenue was up 29% year-over-year. The firm is on track to deliver record annual revenue for 2024 based on significant growth in its Data Center and Client segments.
With the metaverse driving the demand for graphics cards and processors, AMD is in a good spot to reap the benefits. As of Q2, Advanced Micro Devices, Inc. (NASDAQ:AMD) is held by 108 hedge funds.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a designer of graphics processing units (GPUs) for PCs and game consoles. The firm made the metaverse real when it released Omniverse to open beta in December 2020 and NVIDIA Omniverse Enterprise in November 2021. NVIDIA Omniverse is the world’s first simulation and collaboration platform delivering the foundation of the metaverse. It enabled designers, artists, and reviewers to work together in real time across software applications in a shared virtual world from anywhere.
Commenting on the major development, Jon Peddie, founder of Jon Peddie Research, stated:
“Lots of companies are, and have been, talking about the metaverse, but NVIDIA is one of the few that is actually delivering on its promise. NVIDIA brings a broader understanding of the needs of designers of all types and has many of the tools they can use — for free. The NVIDIA Omniverse platform has the potential to transform nearly every industry by making truly collaborative, creative innovation possible in a common virtual space for the first time.”
Later in August 2023, NVIDIA made updates to Omniverse Kit, the engine for developing native OpenUSD applications and extensions, and to the NVIDIA Omniverse Audio2Face foundation app and spatial-computing capabilities. The firm has also partnered with tech giants such as Microsoft to bring the industrial metaverse and AI to hundreds of millions of Microsoft enterprise users via Azure Cloud.
For the second quarter fiscal 2025, NVIDIA Corporation (NASDAQ:NVDA) posted record quarterly revenue of $30 billion, up 122% as compared to the one year ago. GAAP earnings per diluted share were up 168% year-over-year. Meanwhile, the firm witnessed record Data Center revenue of $26.3 billion, up 154% year-over-year.
Therefore, NVIDIA Corporation (NASDAQ:NVDA) has been a major player in the metaverse space considering the developments it has undertaken. The stock ranks among other best metaverse stocks and is held by 179 hedge funds, as of 2024’s second quarter.
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) which is well known for its smartphones, also makes the hardware that blends the digital and the virtual world. While the Mac introduced Apple to personal computing, and the iPhone introduced it to mobile computing, the firm stepped into the metaverse as it debuted its virtual reality headset.
The iPhone maker launched its Vision Pro headset at its annual WWDC event in June 2023. As a revolutionary spatial computer that seamlessly blends digital content with the physical world, the firm claimed the device as to be years ahead and unlike anything created before. It builds upon Apple’s innovation and experience designing high-performance products such as the Mac, iPhone, and wearables like the Apple Watch.
For its fiscal 2024 fourth quarter ended September 28, Apple Inc. (NASDAQ:AAPL) reported revenue of $94.9 billion, a record September quarter revenue driven by iPhone. Additionally, Apple’s active installed base of devices hit a new all-time high across all products and all geographic segments. During the quarter, the firm was excited to announce the new iPhone 16 lineup, Apple Watch Series 10, and AirPods 4.
Thus, Apple Inc. (NASDAQ:AAPL) is set to benefit from its leading innovation, expertise, and a potential surge in demand for AR/VR devices with the growth in the metaverse. The stock is held by 184 hedge funds, as of Q2.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) formerly the Facebook company, builds the future of human connection and the technology that makes it possible. The firm has moved beyond 2D screens and into immersive experiences in the metaverse to help create the next evolution of social technology. It has two reportable segments, the ‘Family of Apps’ including Facebook, Instagram, Messenger, WhatsApp, and other services, and the ‘Reality Labs’ which includes its virtual, augmented, and mixed reality-related consumer hardware, software, and content.
Mark Zuckerberg embraced the metaverse by changing his company’s name from Facebook to Meta, with a focus on bringing the metaverse to life and helping people connect, find communities, and grow businesses. The Meta Quest headsets enable amazing new VR worlds to witness. Users can experience mixed reality like never before with the world’s best library of mixed reality and immersive experiences on the most recent Meta Quest 3S. Simultaneously, Meta has introduced the Meta Horizon Worlds, a VR platform for immersive social experiences where one can explore, play, and create together.
Meta Platforms, Inc. (NASDAQ:META) closed the third quarter with total revenue of $40.59 billion, up 19% year-over-year. Apart from experiencing the rapid adoption of Meta AI and Llama, Meta achieved milestones related to Reality Labs and the integration of AI and wearables. These include experiencing a strong demand for Ray-Ban Meta glasses, the introduction of its first full holographic AR glasses Orion, and the release of its newest Quest 3S. Overall, the firm is witnessing strong product and business momentum.
As of 2024’s second quarter, the company is held by 219 hedge funds. With a strong vision focused on the metaverse and the significant progress the firm has made to make the metaverse a reality, Meta Platforms, Inc. (NASDAQ:META) is a promising metaverse stock to invest in.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) empowers people and organizations to achieve more with technology. It has segments namely Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The company is best known for its software products but it has a solid presence in other emerging domains.
Microsoft was one of the first in the metaverse race with its HoloLens mixed reality headset. While the firm is no longer producing its HoloLens 2 headset, it still remains in the race. Microsoft decided to make a metaverse inside Teams through Microsoft Mesh which powers 3D immersive experiences using next-generation technology that makes virtual connections seem like face-to-face interactions.
While Mesh was available on PC and Meta Quest VR devices, it was announced to be generally available in Microsoft Teams in January 2024. Previously, the Mesh avatars opened the doors of workplace metaverse in Teams. Customers including Accenture, BP, and Mercy Ships are reaping the benefits of Mesh already. Additionally, Microsoft acquired Activision Blizzard, a leader in game development and interactive entertainment content publisher. This move was seen by the company as a step towards growth in its gaming business across mobile, PC, console, and cloud while providing building blocks for the metaverse.
For the FY25 Q1, Microsoft Corporation (NASDAQ:MSFT) recorded revenue of $65.6 billion, up 16% year-over-year. The firm witnessed a solid start to its fiscal year, driven by the continued strength of the Microsoft Cloud, which surpassed $38.9 billion in revenue. Revenue in Productivity and Business Processes was up 12%, revenue in Intelligent Cloud increased 20%, and revenue in More Personal Computing rose 17%, year-over-year. Simultaneously, the firm’s AI business is on track to surpass an annual revenue run rate of $10 billion next quarter.
While the hardware aspect of Microsoft’s presence in the metaverse might fade with the discontinuation of HoloLens 2, its expertise in gaming and the cloud is proven and is expected to foster the firm’s foothold in the metaverse. Microsoft Corporation (NASDAQ:MSFT) ranks among the 10 best metaverse stocks to buy according to hedge funds. The stock is held by 279 hedge funds, as of 2024’s second quarter.
While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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