We recently compiled a list of the 5 Gaming Stocks That Are Solid Bets Despite Tariffs. In this article, we are going to take a look at where NetEase Inc. (NASDAQ:NTES) stands against the other gaming stocks.
As Trump made his move regarding tariffs on multiple trade partners, many stocks with international exposure took a dive. Gaming stocks were also negatively impacted. We decided to take a look at some of the gaming stocks that traded down after the tariff announcement but continue to be solid investments.
The reason these stocks are not hugely impacted by tariffs is because of the nature of the business. Games developed by these companies have a huge fan following, which usually isn’t deterred by minor increases in price. Moreover, the digital nature of the products means enforcing tariffs isn’t as straightforward as it is on physical goods. On top of that, these companies sell to a global audience so tariffs even on a significantly big market base don’t impact the overall business as much.
To come up with our list of gaming stocks that are a good bet despite tariffs, we only considered stocks with a market cap of at least $5 billion.
Two gamers enjoying an immersive experience playing together online via their gaming console.
NetEase Inc. (NASDAQ:NTES)
NetEase Inc. is a gaming company that provides a range of services including internet content services, music streaming, online games, and online intelligent learning services. It operates in games and related services, cloud music, youdao, and other segments and is the second-largest gaming company in China.
Owing to it being a Chinese company, the stock doesn’t enjoy the rich valuations that other companies do. However, on a fundamental level, the company is as strong as a gaming company can be. Its strength isn’t derived from one-off game releases but a sustained line-up of games that continue to make their mark on the industry. Its new titles as well as legacy titles continue to be popular among gamers.
NetEase is one of two Chinese companies that have built their own gaming engine, the other one being Tencent. This already puts the company on par with global gaming giants. Tariffs may slow down the company’s progress in the US but the company’s ambitious international plans are unlikely to be halted by such measures. It has already delivered two successful titles in Japan and internationally in the form of Racing Master and Naraka: Bladepoint.
Even locally, Take Eggy Party has attracted more daily active users than any other local game. Anyone who is keeping an eye on gaming stocks would like to keep NetEase on their watchlist.
Overall NTES ranks 1st on our list of the gaming stocks that are solid bets despite tariffs. While we acknowledge the potential of NTES 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 as promising as NTES 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 was originally published at Insider Monkey.
