We recently compiled a list of the 10 Best Metaverse Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other 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).
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.
Overall MSFT ranks 1st on our list of the other Best Metaverse Stocks to Buy According to Hedge Funds. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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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Disclosure: None. This article is originally published at Insider Monkey.
