In this article, we will explore the 7 best gaming stocks to buy now.
A Quick Look at the Gaming Industry
The gaming industry does not only provide entertainment but also drives innovation in technology and creativity. The global gaming market was valued at $249.55 billion in 2022. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 13.1% during 2023-2030 to reach $665.77 billion by the end of the forecast period. This expansion is driven by several key trends that are reshaping how games are developed and played.
The growing popularity of cloud gaming, the introduction of VR and AR technologies, and the rising interest in online gaming are some of the key trends driving market growth.
The rising interest in esports and online gaming tournaments is expected to boost consumer spending on games and contribute to market growth. Esports features teams and individual players competing in various video games. In July and August, the first-ever Esports World Cup took place in Riyadh, Saudi Arabia, attracting over 1,500 players and offering a massive prize pool of $60 million. The event spanned eight weeks and included 23 competitions across 22 different video games, such as Call of Duty and Fortnite. This tournament is part of Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the country’s economy.
Emergence of Generative AI
Another key trend is the integration of generative AI in gaming. This technology allows for the creation of dynamic storylines and realistic characters that can interact with players in a more lifelike manner. Experts believe this will enhance player engagement by personalizing experiences based on individual actions. The potential for AI to craft entire game worlds opens up new avenues for creativity in game design.
According to Bernard Marr, a world-renowned futurist and author of “Generative AI in Practice: 100+ Amazing Ways Generative Artificial Intelligence is Changing Business and Society”, generative AI is revolutionizing video game development by providing tools that enable developers to create engaging content, realistic visuals, and immersive gameplay experiences. Marr believes that generative AI can help developers create vast, unique game environments through procedural generation, allowing for dynamic gameplay experiences that change with each session.
Moreover, this technology can generate music and sound effects that adapt to in-game events, enriching the overall player experience. By automating tasks like quest creation and dialogue writing, generative AI can help developers enhance storytelling and design. Marr thinks that although generative AI won’t replace human creativity, it can speed up game development and reduce costs, which is a big step forward for the gaming industry.
Now that we have discussed what’s going on in the gaming industry, let’s take a look at the 7 best gaming stocks to buy now.
Methodology
To compile our list of the 7 best gaming stocks to buy now, we used the Finviz and Yahoo stock screeners to find the largest gaming companies. We also reviewed our own rankings, sifted through ETFs, and consulted various online resources. From an initial pool of more than 20 gaming stocks, we focused on the top 7 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s database of 912 elite hedge funds. The 7 best gaming stocks to buy now are ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
Why do we care about what hedge funds do? 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).
7 Best Gaming Stocks To Buy Now
7. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 29
Sony Group Corporation (NYSE:SONY), commonly known as Sony, is a Japanese multinational conglomerate corporation. It is a major player in the gaming industry, primarily through its subsidiary, Sony Interactive Entertainment. Known for its iconic PlayStation brand, Sony develops and sells video game consoles, software, and services. The company has released several successful consoles, including the PlayStation 4 and PlayStation 5, which have garnered a large and loyal customer base.
The corporation’s gaming segment is showing strong performance, with 116 million monthly active PlayStation accounts in June, reflecting a 7% increase from the previous year. Total play time also increased 8% year-over-year.
Sony Group Corporation (NYSE:SONY) released its results for the first quarter of fiscal year 2024, which ended on June 30, 2024. Despite not releasing new titles recently, user engagement remained high, driven by the growing PlayStation 5 user base and popular franchise games like Helldivers 2 and the Ghost of Tsushima PC version. Upcoming and new releases, including the live service game Concord, Astro Bot, and God of War Ragnarok for PC, are expected to further boost player interest and the company’s financial performance.
Additionally, Sony’s Network Services saw a 13% year-over-year increase in US dollar-based sales, largely due to a shift toward premium services like PlayStation Plus. The company is focused on enhancing user engagement and expanding its active user base while also strengthening the PlayStation platform. Meanwhile, the Studio business group is improving its development schedule and optimizing projects to ensure a steady release of hit titles.
On September 10, Sony Group Corporation (NYSE:SONY) unveiled the PlayStation 5 Pro, designed to enhance the gaming experience with advanced features. This new console boasts improved GPU performance, advanced ray tracing, and AI-driven upscaling, promising sharper images and smoother gameplay. The PS5 Pro aims to deliver richer gameplay experiences and is set to launch on November 7, 2024.
With a strong lineup of exclusive games and a commitment to innovation, Sony Group Corporation (NYSE:SONY) continues to be a major force in the gaming market. Over the past ten years, the corporation has grown its levered free cash flow at a compound annual growth rate (CAGR) of 11%.
SONY is one of the best gaming stocks to buy now. According to Insider Monkey’s Q2 database of over 900 hedge funds, 29 hedge funds held stakes in Sony Group Corporation (NYSE:SONY). As of June 30, Fisher Asset Management holds 38.32 million shares of the company, valued at $651.08 million, making it SONY’s most prominent shareholder.
6. NetEase Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 35
NetEase Inc. (NASDAQ:NTES) is a leading Chinese internet technology company with a strong focus on gaming, education, and e-commerce. The company has built a diverse portfolio of popular mobile and PC games that cater to both domestic and international markets. By developing in-house titles and collaborating with global partners, the company has continuously expanded its portfolio of mobile game offerings over the years.
The company is making significant strides in the gaming industry with its recently launched new games. The multiplayer survival game Once Human achieved over 230,000 peak concurrent users shortly after launch, ranking among the top five games on Steam in July. This innovative title combines supernatural elements with engaging gameplay. Shortly after an update in August, Once Human ranked at the top on Steam’s top-seller chart in 12 countries, gathering over 10 million downloads.
In late July, NetEase Inc. (NASDAQ:NTES) launched its highly anticipated battle royale game, Naraka: Bladepoint Mobile, which offers fast-paced combat and an innovative co-pilot AI system that allows players to team up with AI allies for immersive experiences. The game quickly gained popularity, reaching the number three spot on the iOS grossing chart shortly after its release, showcasing its appeal among gamers.
Additionally, the company continues to enhance its flagship titles, like Fantasy Westward Journey, which recently saw a brand new expansion pack in the second quarter to add new content and fresh gameplay.
In the second quarter of 2024, NetEase Inc. (NASDAQ:NTES) reported total net revenue of $3.5 billion, marking a 6% increase compared to the same quarter in 2023. Revenue from games and related value-added services rose by 7%, largely driven by the success of mobile titles like Identity V and Justice Mobile. Notably, mobile games contributed approximately 76.4% of the total net revenue from online game operations, highlighting their significant role in the company’s growth.
With a focus on innovation and community engagement, NetEase Inc. (NASDAQ:NTES) is expanding its presence across various genres and markets. Over the past ten years, the company has achieved a compound annual growth rate (CAGR) of 26% in its revenue, while its net income has grown at a CAGR of 20% during the same period.
NetEase Inc. (NASDAQ:NTES) is an attractive option for investors looking to capitalize on the booming mobile gaming market. Analysts are bullish on NTES. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target of $114.38 set by analysts indicates a potential upside of 14.90% from current levels.
As of the second quarter of 2024, NetEase Inc. (NASDAQ:NTES) was held by 35 hedge funds, according to Insider Monkey’s database.
5. Electronic Arts Inc. (NASDAQ:EA)
Number of Hedge Fund Holders: 40
Electronic Arts Inc. (NASDAQ:EA) is a prominent American video game company and a major player in the interactive entertainment industry. The company develops and delivers games, content, and online services for various platforms, including consoles, PCs, and mobile devices. The company boasts a portfolio of highly acclaimed franchises such as The Sims, Madden NFL, EA SPORTS FIFA, Battlefield, Dragon Age, and Plants vs. Zombies.
On September 17, Electronic Arts Inc. (NASDAQ:EA) hosted its Investor Day event, outlining its long-term growth strategy focused on engaging large online communities and creating blockbuster interactive experiences. The company emphasized the role of AI in enhancing efficiency and transformation within its operations. EA is optimistic about sustained growth in its EA SPORTS brand. The company announced plans to introduce a new Battlefield experience with community testing set for early 2025. EA is investing in The Sims platform, with expectations of more than doubling its annual net bookings over the next five years. The company also announced a collaboration with Amazon MGM studios on a movie based on The Sims.
Management outlined plans to explore new business opportunities beyond gaming through a socially-driven EA SPORTS app, with sports content, live sports data, interactivity and gaming centered on global football. These initiatives position EA as a strong contender for future growth in the gaming and entertainment industry.
Electronic Arts Inc. (NASDAQ:EA) reported strong results for Q1 FY25, with net bookings reaching $1.262 billion, surpassing the high end of the guidance range of $1.25 billion. This growth was driven by strong performance across Madden NFL 24, FC Online, and FC Mobile. During the quarter, EA SPORTS FC attracted millions of new fans through real-world tournaments and events. The company also revealed Dragon Age: The Veilguard gameplay, which received millions of views and trended no. 1 on YouTube Gaming.
Additionally, after the quarter ended, EA SPORTS College Football 25 welcomed 5 million unique players in its first week, highlighting the franchise’s appeal.
The company’s net revenue for its fiscal first quarter of 2025 was $1.66 billion, with a healthy cash flow from operations amounting to $120 million. Electronic Arts Inc. (NASDAQ:EA) is actively returning value to shareholders by repurchasing shares and paying dividends. During Q1 2025, the company repurchased 2.8 million shares for $375 million, bringing the total for the trailing twelve months to 10.2 million shares for $1.35 billion. The company also declared a quarterly cash dividend of $0.19 per share.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 40 hedge funds held stakes in Electronic Arts Inc. (NASDAQ:EA). As of June 30, D. E. Shaw holds 1.39 million shares of the company, valued at $193.72 million, making it EA’s most prominent shareholder.
The company has managed to grow its net income at a compound annual growth rate (CAGR) of 25% over the past ten years. Electronic Arts Inc. (NASDAQ:EA) ranks among the top 5 on our list of the best gaming stocks to buy.
4. Take-Two Interactive Software Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 48
Take-Two Interactive Software Inc. (NASDAQ:TTWO) is a prominent American video game holding company based in New York City. It specializes in developing, publishing, and marketing interactive entertainment products for consumers worldwide. The company operates through well-known brands such as Rockstar Games, 2K, Private Division, and Zynga, which cater to various gaming platforms including consoles, PCs, and mobile devices. The company’s wide range of games are delivered through physical retail, digital downloads, online platforms, and cloud services.
The company reported solid performance in the first quarter of fiscal year 2025, with total net bookings rising to $1.22 billion, a 1% increase from the previous year. Net bookings from recurrent consumer spending accounted for 83% of total net bookings. Key contributors to net bookings included popular titles like NBA 2K24, Red Dead Redemption, and Grand Theft Auto Online. The company’s net revenue saw a 4% increase year-over-year, reaching $1.34 billion. Recurrent consumer spending increased by 3% and accounted for 82% of the total revenue.
Take-Two Interactive Software Inc. (NASDAQ:TTWO) is committed to engaging players through exciting new game releases and updates. The company is focused on enhancing its core franchises while also looking for new growth opportunities. On September 6, 2024, the company announced the launch of NBA 2K25, the latest iteration of its popular basketball video game series. This new version is available on multiple platforms, including PlayStation 5, PlayStation 4, Xbox Series X|S, Xbox One, Nintendo Switch, and PC. NBA 2K25 introduces significant gameplay enhancements powered by ProPLAY technology, featuring over 9,000 new animations derived from real NBA footage. The game also includes exciting new modes in MyTEAM and The City, along with returning favorites and new role-playing experiences in MyCAREER and MyNBA, offering players a richer and more immersive basketball gaming experience.
As of October 7, TTWO’s stock is trading at $152.21, and analysts have a consensus buy recommendation for the stock. The median 1-year stock price target set by analysts is $185.00, indicating a potential upside of 21.54% from its current price. This presents a promising investment opportunity for those looking to capitalize on the future of interactive entertainment.
Take-Two Interactive Software Inc. (NASDAQ:TTWO) has a strong portfolio of well-established franchises with a loyal customer base, consistently driving sales and engagement. The company’s commitment to providing regular updates and new content helps maintain player interest and satisfaction, ensuring a steady stream of revenue from both new releases and ongoing content. This strategic approach allows the company to benefit from the growing video games market.
TTWO is one of the best gaming stocks to buy now. According to Insider Monkey’s Q2 database of over 900 hedge funds, 48 hedge funds held stakes in Take-Two Interactive Software Inc. (NASDAQ:TTWO).
3. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 54
Roblox Corporation (NYSE:RBLX) is an American video game developer that ranks among the top 3 on our list of the best gaming stocks to buy now. The company developed Roblox, which is a dynamic gaming platform and game creation system that allows users to create, share, and play games developed by other users. Roblox offers free access to its extensive library of millions of games while generating revenue through in-game purchases using its virtual currency, Robux. Players can buy Robux to unlock special features, customize their avatars, and enhance their gaming experience. This model attracts a large user base and also incentivizes developers to create engaging content, as they can earn Robux that can be exchanged for real money.
The corporation aims to actively expand its platform to include various uses such as gaming, social interaction, shopping, and education. During the Q4 2024 earnings call, management highlighted that the company is venturing into e-commerce by partnering with Walmart to test real-world shopping experiences within the platform.
In Q2 2024, Roblox Corporation (NYSE:RBLX) reported impressive financial results, with revenue reaching $893.5 million, a 31% increase from the previous year. Bookings also rose by 22% year-over-year to $955 million, surpassing guidance expectations. The platform achieved a record 79.5 million average daily active users (DAUs), reflecting a 21% year-on-year growth. Hours engaged hit a record 17.4 billion, up 24% year-over-year, with significant growth in key markets like Japan and India. Additionally, in Q2 of 2023, the company’s cost to serve 1,000 hours was approximately $12.75. In Q2 2024, that cost decreased to $9.61, representing a 25% fall year-over-year.
The company continues to focus on enhancing its user-generated content ecosystem, which attracts a diverse audience. Roblox Corporation (NYSE:RBLX) is investing in creating better experiences for its creator community while also expanding into new areas.
According to Insider Monkey’s database, 54 hedge funds held stakes in Roblox Corporation (NYSE:RBLX) as of the second quarter. Among these, ARK Investment Management stands out as the largest shareholder in RBLX, with stakes worth $496.33 million.
2. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 63
Sea Limited (NYSE:SE), headquartered in Singapore, is a prominent tech conglomerate. Through its gaming division, Garena, the company has a significant presence in the gaming industry. It is one of the most valuable esports companies in the world. Garena is a major developer and publisher of online games. Its flagship title, Free Fire, is one of the most popular mobile battle royale games worldwide. The company has a global footprint across more than 130 markets and actively engages users through esports events, including the record-breaking Free Fire World Series 2021, which attracted 5.4 million concurrent viewers.
In addition to gaming, Sea Limited (NYSE:SE) operates Shopee, one of the largest e-commerce platforms in Southeast Asia and Taiwan, and SeaMoney, a growing digital financial services provider.
In its latest update for the second quarter of 2024 ended June 30, Sea Limited (NYSE:SE) highlighted the success of its gaming and digital entertainment division, Garena. The company reported over 20% year-on-year growth in bookings, primarily driven by the popular mobile game Free Fire. The game continues to thrive because of its large and highly engaged gamer base. The company reported that throughout the second quarter of 2024, Free Fire had over 100 million daily active users. In the Q2 2024 earnings call, management shared that according to Sensor Tower, Free Fire was the most downloaded mobile game globally in the second quarter.
Additionally, Sea Limited (NYSE:SE) is set to expand its gaming offerings with the upcoming launch of Need for Speed: Mobile in Taiwan, Hong Kong, and Macau, in collaboration with Tencent and Electronic Arts. This move will allow the company to bring a high-quality game with a classic IP to its dedicated gamer community and further enhance user engagement.
In Q2 2024, Sea Limited’s Digital Entertainment segment reported bookings of $537 million, reflecting a 21% increase year-over-year. The digital entertainment and gaming division saw a rise in quarterly active users to 648 million, up 19% year-over-year, and paying users reached 52.5 million, a growth of 21.7%.
Sea Limited (NYSE:SE) has a diversified revenue model that includes three main segments: gaming and digital entertainment, e-commerce, and digital financial services. Overall, the company achieved total revenues of $3.8 billion in the second quarter of 2024, marking a 23% increase from the previous year. The company generated a gross profit of $1.6 billion, up 9.2%. As of June 30, Sea Limited (NYSE:SE) had $9 billion in cash, cash equivalents, short-term investments, and other treasury investments, representing a net increase of $364.7 million from March 31, 2024. This indicates strong financial health and growth potential.
The company’s diverse revenue streams and focus on emerging trends and customer engagement give it a strong competitive advantage, positioning Sea Limited (NYSE:SE) well for future growth. According to Insider Monkey’s database, 63 hedge funds held stakes in Sea Limited (NYSE:SE) in the second quarter of 2024. This brings SE to the 2nd spot on our list of the best gaming stocks to buy now.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational corporation that is widely recognized for its software products like the Windows operating system. The company has established itself as a key player in the global gaming market through its development of Xbox consoles and gaming services. Additionally, the company has made significant strides in the gaming industry, particularly with its acquisition of Activision Blizzard for nearly $69 billion in October 2023. With this acquisition, Microsoft Corporation (NASDAQ:MSFT) gains access to a host of popular franchises, including Call of Duty, Warcraft, Diablo, Overwatch and Candy Crush, which have accelerated growth in the company’s gaming business across mobile, PC, console, and cloud platforms. This landmark deal not only enhances Microsoft’s gaming portfolio but also positions it as one of the largest gaming companies in the world.
The company reported strong financial results for its fiscal fourth quarter of 2024, showcasing significant growth across various segments. The company achieved revenue of $64.7 billion, marking a 15% increase compared to the same period last year. Notably, Microsoft Corporation’s (NASDAQ:MSFT) gaming business saw an impressive 44% rise in revenue, driven largely by the acquisition of Activision Blizzard, which contributed 48 points to this growth. Xbox content and services revenue surged by 61%, slightly exceeding expectations, with a net impact of 58 points from the Activision Blizzard deal.
In addition to revenue growth, Microsoft Corporation (NASDAQ:MSFT) reported an operating income of $27.9 billion and a net income of $22 billion for the quarter, reflecting increases of 15% and 10% year-over-year, respectively. In its gaming division, the company highlighted its expanding user base, which has now reached over 500 million monthly active users across platforms and devices. Furthermore, the company previewed a record 30 new titles at its showcase this quarter, with popular games like Call of Duty: Black Ops 6 set to launch on Game Pass.
During the Q4 2024 earnings call, management shared that the success of the Fallout TV show on Amazon Prime also contributed to increased engagement with the franchise on Game Pass, showcasing Microsoft’s strategy to connect its gaming IPs with broader entertainment audiences. Fallout made its debut on Amazon Prime in the quarter ended June 30, 2024, and it became the second most-watched title on the platform. As a result of the show’s popularity, the hours played on Game Pass for Fallout games increased nearly five times compared to the previous quarter.
On September 16, 2024, Microsoft Corporation (NASDAQ:MSFT) announced a quarterly dividend of $0.83 per share, which is an increase of 10% from the previous quarter. This dividend will be paid on December 12, 2024, to shareholders who are on record as of November 21, 2024. Additionally, the board approved a new share repurchase program allowing for up to $60 billion in buybacks, which does not have an expiration date and can be terminated at any time.
This combination of strategic growth and solid financial performance makes Microsoft Corporation (NASDAQ:MSFT) an appealing investment opportunity. According to Insider Monkey’s Q2 database of over 900 hedge funds, 279 hedge funds held stakes in MSFT.
Overall, MSFT ranks first among the 7 best gaming stocks to buy now. While we acknowledge the potential of gaming companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an 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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