Meta might be the biggest name in the metaverse, but there are actually a lot of companies competing in this space, and Meta is not our best pick here.

For those not familiar with the metaverse, the gist is this: The metaverse aims to be a digital universe. It’s an online environment where people live, work, and play. It may seem like science fiction, but so did the Internet back in the ’60s.

It stands to be one of the biggest innovations in digital technology since the Internet. According to Bank of America, the global metaverse market could grow to between $390 billion and $800 billion by the mid-2020s.

Meta isn’t the only major player itching to get in early. Amazon and Microsoft all plan on making the voyage into the metaverse, too.

Money Morning Chief Investment Strategist Shah Gilani knows that there won’t be just one metaverse. Like each company has an individual domain on the Internet, they’ll have to create independent metaverses to sell company-specific products.

This is where the real money lies. And today, we’re going to look at the three best stocks to buy now for that deal with the metaverse.

Best Metaverse Stocks, No. 3: Unity Software

Unity Software Inc. (NYSE: U) was, and still is, mostly used for video games. The company’s software is one of the two main video game engines used to customize how players interact within video game’s digital world. In fact, 94 of the largest game development studios use the Unity engine.

But Unity is much more than just a development tool for video games.

Nowadays, Unity has been used to develop virtual concerts, sporting events, and live conferences. The software is used by architects and engineers for collaborative, in-depth design. Automakers like Volkswagen use the software to create 3D models of cars before going to market.

But for any metaverse to exist, the world needs to be built. This is where Unity comes into play. The company’s software makes it possible to build out detailed digital environments for the many subsets of the metaverse to exist.

In fact, Unity is all in when it comes to the metaverse. The company’s CEO John Riccitiello said the company will “support and shape the metaverse” and will “emphasize content creation, cross-platform access, and narrowing the distance and reducing the friction between creators and consumers.”

While Unity might’ve had some struggles after the IPO last year, the company is finally profitable. With nearly $1.8 billion in the coffer and no debt, Unity is in a great position for growth as the metaverse industry expands.

Best Metaverse Stocks, No. 2: Roblox

Right now, Roblox Corp. (NYSE: RBLX) might be the closest thing to a social metaverse.

The online video game platform has 43.2 million daily active users, its own digital currency called “Robux,” and a wide range of unique virtual experiences, like live digital concerts. Lil Nas X performed at one back in 2020.

Outside developers are always creating new content to add into the existing game, which helps to grow the metaverse.

But the biggest catch for Roblox is it allows players to create and share their own games. Users don’t need any coding experience to make games on the Roblox platform either. The block-based system makes it easy to design and share your games.

These games tend to go viral, too, via social media. They gain popularity at no additional cost and are monetized through “Robux,” which players use to pay each other in for shared content. And “Robux” can be converted back into cash.

Roblox’s 1.3 million developers are expected to collectively earn $500 million from their creations in 2021.

This has helped grow Roblox over the last three years. Daily active users jumped from 10 million to 42 million, about 320%. Users spent 9.7 billion hours playing Roblox in 2021 versus 2.1 billion in 2018.

The company was incredibly successful during the pandemic’s peak in 2020. Even as restrictions ease, Roblox still expects to gain 186% in revenue for 2021 – about $2.65 billion.

That number is sure to climb as more the metaverse becomes more universal.

Best Metaverse Stocks, No. 1: Nvidia Corp.

As the companies build out the metaverse, they’re going to want Nvidia Corp.’s (NASDAQ: NVDA) technology to help create it. This cloud-based, virtual computing juggernaut is indispensable to the creation process of the metaverse, which is why Nvidia is going to be one of the best metaverse stocks to own.

But for Nvidia, it’s not just about the metaverse – it’s also about the omniverse. And Nvidia centered its annual artificial intelligence (AI) conference, GTC, around this concept of “digital twins.”

Nvidia’s own metaverse platform will connect 3D worlds into an integrated digital universe. Essentially, its simulation software uses real-world data to create performance predictions. The concept has a few applications like virtual avatars, climate change models, data creation, and 5G.

Over the next two years, companies can apply this tech to their own vertical markets – this is especially useful for self-driving vehicles. It offers a platform within the digital world to get it right before hitting the real world.

Outside of the omniverse, Nvidia produces some of the best graphics and video processing chips used in high-end computing servers, supercomputers, AI and virtual reality applications. And the tech giant’s chips will play a crucial role massive amount of processing power needed to power the metaverse.

The company pours a massive amount of money into research and development – about $1.15 billion. That’s more than 20% of its total revenue, and one of the highest amounts among the tech giants. Despite all that spending, Nvidia’s profit margin is up 126% year over year.

Nvidia as the graphics king. As the metaverse gets built, companies are going to want Nvidia technology. Shah says, “Everything that the metaverse needs, everything that is absolutely indispensable to the creation of any metaverse, is going to involve Nvidia.”

Pair that all together, and you can see why he recommends grabing $100 worth of Nvidia fractional shares today.

— Coty Poynter

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Source: Money Morning