In this article, we discuss 10 metaverse stocks billionaires are loading up on. If you want to see more stocks in this selection, check out 5 Metaverse Stocks Billionaires Are Loading Up On.
The concept of the metaverse gained significant attention during the years 2021-2022, with a major contributing factor being Facebook's announcement to rebrand itself as "Meta." This move by Facebook led to increased interest and discussions surrounding the metaverse. The global metaverse industry is projected to experience an annual growth rate of 44.8% and reach a value of $205.3 billion by 2023. Over the forecast period of 2023-2030, the metaverse industry is expected to exhibit a steady growth trajectory, with a compound annual growth rate (CAGR) of 33.5%. Despite the anticipated widespread adoption among consumers not yet being realized, major technology companies are persistently investing billions of dollars into the market, considering it the next significant innovation and the future of the internet.
Extended Reality (XR) represents a frontier of emerging technologies that are coming together to shape the future metaverse. This metaverse is envisioned as an immersive and interconnected 3D world, where virtual reality, augmented reality, artificial intelligence, blockchain, and cryptocurrencies will redefine various aspects of life, including work, social interactions, and leisure activities. KPMG recently cited David Whelan, CEO of Engage – a virtual world and metaverse company in the enterprise and education space:
“By the time you take a 5-minute walk down a virtual city road, we’re going to know what your sexual preference is, what your favorite color is, what brands you associate yourself with – and this is without you even saying a word by utilizing eye tracking and biometric data. This is some of the type of data that’s emerging from immersive technologies, which I know is a scary concept and is something that’s going to need to be regulated. The real issue is regulation is always 10 years behind the tech.”
Pew Research Center and Elon University's Imagining the Internet Center conducted a study where they surveyed 624 technology experts, including innovators, developers, business leaders, researchers, and activists. The survey sought their predictions and insights on the trajectory and impact of the metaverse by the year 2040. These experts provided open-ended responses to offer their perspectives on the future of the metaverse. First, a significant portion of the surveyed experts believe that by 2040, the integration of extended reality into people's daily lives will primarily revolve around augmented reality and mixed reality tools, rather than the more immersive virtual reality experiences commonly associated with the metaverse. Second, these experts cautioned that these new digital worlds have the potential to amplify various human traits and behaviors, both positive and negative. They expressed particular concerns about the control wielded by those who govern these systems, as it could restrict individual agency, impede self-fulfillment, and limit human potential.
As the metaverse industry continues to expand and attract investments, billionaires are positioning themselves to reap the benefits of this growth. Billionaires are showing strong interest in metaverse stocks such as Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA).
Insider Monkey tracks billionaire-owned stocks and in this article, we selected the metaverse stocks that attracted the highest number of billionaire investors during the first quarter of 2023. We have also mentioned the overall hedge fund sentiment towards each stock as of Q1 2023. The following companies play a significant role in supporting and advancing the development of the metaverse.
These firms were chosen from technology and software, gaming and entertainment, cloud computing and infrastructure, e-commerce and retail, fintech, advertising and marketing, and social media and communication sectors, attracting the highest number of billionaire investors.
Metaverse Stocks Billionaires Are Loading Up On
10. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 43 Number of Billionaire Investors: 8
Baidu, Inc. (NASDAQ:BIDU) is a Chinese technology company primarily known for its internet-related services and products, including its search engine. Baidu, Inc. (NASDAQ:BIDU) is actively working on developing XiRang, a network of technological capabilities aimed at supporting the growth of the metaverse. In December 2022, Baidu organized its AI Developer Conference within a virtual world called Creator City, which was built on the XiRang platform. This virtual environment allowed participants to engage in a futuristic setting created by Baidu, highlighting the company's efforts in advancing the metaverse concept. Baidu, Inc. (NASDAQ:BIDU) is one of the top metaverse stocks attracting the interest of billionaires. In Q1 2023, 8 billionaire portfolios held shares of Baidu, Inc. (NASDAQ:BIDU), including Steve Cohen of Point72 Asset Management.
On May 17, Loop Capital analyst Rob Sanderson kept a Buy rating and a $215 price target on Baidu, Inc. (NASDAQ:BIDU) following its Q1 results. Baidu's financial performance exceeded expectations, with a 4% higher revenue than anticipated and an operating profit that was 26% higher than consensus estimates. The company's advertising revenue growth showed improvement, accelerating to 6% compared to negative growth in each quarter of the previous year. The analyst also highlighted that Baidu's user growth was strong, and its cloud segment achieved non-GAAP profitability for the first time.
According to Insider Monkey's first quarter database, 43 hedge funds were bullish on Baidu, Inc. (NASDAQ:BIDU), up from 40 funds in the last quarter.
9. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 37 Number of Billionaire Investors: 9
Roblox Corporation (NYSE:RBLX) is a leading global platform for creating, sharing, and playing user-generated games and experiences. Roblox Corporation has been at the forefront of creating a metaverse-like experience for its users. In Q1 2023, 9 billionaires were bullish on Roblox Corporation (NYSE:RBLX) as a leading metaverse player.
On May 11, Needham analyst Bernie McTernan maintained a Buy rating on Roblox Corporation (NYSE:RBLX) but lowered the firm's price target on the shares to $48 from $53 after its Q1 results. McTernan mentioned that the higher developer exchange fees reported in Q1, along with new comments regarding fixed cost growth, influenced the revised price target. However, the analyst also noted that the company's recent statements about expecting bookings growth to outpace infrastructure spending growth starting in Q3 should alleviate investor concerns about fixed costs in the medium term.
According to Insider Monkey's first quarter database, 37 hedge funds were bullish on Roblox Corporation (NYSE:RBLX), up from 29 funds in the earlier quarter. Billionaire Ken Griffin's Citadel Investment Group held a $95 million stake in the company.
SaltLight Capital Management made the following comment about Roblox Corporation (NYSE:RBLX) in its Q4 2022 investor letter:
“We’ve used this incremental capital strategy with some of our ‘early-stage’ investments such as Roblox Corporation (NYSE:RBLX), Purple Group, Transaction Capital and Karooooo (Cartrack).
Today, we would like to discuss one of our early-stage investments, Roblox. While there is a risk that we may be premature, mistaken, or even wrong in our evaluation of this opportunity, we see Roblox as a company with the potential to ‘matter’.
Roblox is a 3D real-time content platform that bridges consumers and creators. Instead of being a conventional gaming product, Roblox acts as a tool provider that democratises the creation of 3D real-time user-generated content (UGC)…” (Click here to read the full text)
8. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Number of Hedge Fund Holders: 52
Number of Billionaire Investors: 10
Take-Two Interactive Software, Inc. (NASDAQ:TTWO) creates, releases, and promotes interactive entertainment solutions worldwide. The company can leverage its existing assets, technology, and intellectual properties to create metaverse-related experiences. During the first quarter of 2023, Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was included in the investment portfolios of 10 billionaires.
On June 2, Deutsche Bank increased its price target for Take-Two Interactive Software, Inc. (NASDAQ:TTWO) to $155 from $120 while maintaining a Hold rating on the shares. According to the firm’s research note, Take-Two Interactive Software, Inc. (NASDAQ:TTWO)’s long-term guidance has improved the overall outlook, and the most profitable opportunities have already been capitalized upon.
According to Insider Monkey’s first quarter database, 52 hedge funds were long Take-Two Interactive Software, Inc. (NASDAQ:TTWO), compared to 53 funds in the prior quarter. Billionaire Chase Coleman’s Tiger Global Management is a prominent stakeholder of the company, with 2.4 million shares worth $286.3 million.
Similar to Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is among the preferred choices of billionaires when it comes to investing in the metaverse.
Diamond Hill All Cap Select Strategy made the following comment about Take-Two Interactive Software, Inc. (NASDAQ:TTWO) in its Q4 2022 investor letter:
“Video game developer Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has faced weakness in the mobile gaming market, in addition to game-launching delays. The company reported underwhelming quarterly results in Q4 and lowered its full-year guidance. After reexamining our long-term thesis, we decided to exit our position in favor of more attractive opportunities.”
7. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 57
Number of Billionaire Investors: 11
Autodesk, Inc. (NASDAQ:ADSK) offers a wide range of software solutions that are commonly used in architecture, engineering, and entertainment industries. These software tools, such as AutoCAD, Revit, Maya, and 3ds Max, are utilized for designing, modeling, and animating 3D assets and environments. These capabilities can be valuable for creating virtual environments and assets within the metaverse. It is one of the top metaverse stocks billionaires are loading up on. Autodesk, Inc. (NASDAQ:ADSK) was found in 11 billionaire portfolios at the end of March 2023.
On May 23, Citi analyst Tyler Radke maintained a Buy rating on Autodesk, Inc. (NASDAQ:ADSK) but decreased the price target on the shares to $241 from $265. The analyst expressed a more cautious outlook in the near term due to macroeconomic uncertainties and concerning signals from Citi's resellers survey. The survey indicates the weakest achievement in terms of acceleration and observed growth rates in quite some time.
According to Insider Monkey’s first quarter database, 57 hedge funds were bullish on Autodesk, Inc. (NASDAQ:ADSK), compared to 54 funds in the prior quarter. Billionaire Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 668,652 shares worth $139 million.
Arch Capital made the following comment about Autodesk, Inc. (NASDAQ:ADSK) in its Q3 2022 investor letter:
“Let’s look at a specific example. One of our portfolio companies is Autodesk, Inc. (NASDAQ:ADSK), a construction/engineering/architecture software business with an incredible moat. Our cost basis on the stock is $230. Shares traded as high as $340 in 2021 but today are down around $200. With this declining share price, Autodesk management has been able to take the healthy free cash flow it generates and retire some of its shares outstanding at an accelerated rate.
At the beginning of 2022, Autodesk had approximately 220 million shares outstanding. Today, that number is down to around 216 million, and we expect this number to continue to drop over the next few years as the company ramps up its free cash flow generation. This reduction in share count will juice growth in free cash flow per share, which will determine what returns we get owning Autodesk over the long haul. The lower the stock drops, the faster Autodesk’s share count drops, all else equal.”
6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 99
Number of Billionaire Investors: 18
Adobe Inc. (NASDAQ:ADBE) is a software company renowned for its creative tools and digital experience solutions. Many of its existing products, like Photoshop, Illustrator, After Effects, Premiere Pro, and Dimension, are commonly used in the creation of digital content, making them applicable to the development of the metaverse. These tools empower developers, artists, and content creators to produce assets, graphics, animations, and visual effects specifically for the metaverse. Similarly, Adobe Inc. (NASDAQ:ADBE)’s Substance suite, which includes Substance Painter and Substance Designer, offers robust capabilities for designing and texturing 3D models, making it valuable for creating assets and environments within the metaverse. It is one of the top metaverse stocks favored by billionaires. In the March quarter, 18 billionaires were long Adobe Inc. (NASDAQ:ADBE), including Cliff Asness of AQR Capital Management.
On June 2, Bank of America increased its price target for Adobe Inc. (NASDAQ:ADBE) to $480 from $400 while maintaining a Neutral rating on the shares. This adjustment comes after BofA hosted discussions with creative professionals regarding trends in the digital content design software market, which left them with a positive outlook. The higher price target reflects expectations of both peer multiple expansion and a favorable view of Adobe's new artificial intelligence features and market dominance. However, BofA continues to have a Neutral rating on the shares due to concerns related to the impact of the Figma deal.
According to Insider Monkey’s first quarter database, 99 hedge funds were bullish on Adobe Inc. (NASDAQ:ADBE), with collective stakes worth $7.3 billion, compared to 99 funds in the prior quarter worth $8.3 billion.
Like Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), Adobe Inc. (NASDAQ:ADBE) is a prominent metaverse stock favored by billionaires.
Polen Focus Growth Strategy made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet and Adobe Inc. (NASDAQ:ADBE) is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
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Disclosure: None. 10 Metaverse Stocks Billionaires Are Loading Up On is originally published on Insider Monkey.