Here’s what 9 companies in our portfolio are working on to profit from the metaverse

By June 22, 2022Metaverse
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Ahead of Jim Cramer’s interview with Meta Platforms (META) CEO Mark Zuckerberg for Wednesday evening’s “Mad Money,” we wanted to share some thoughts on how we think Investing Club members should be exploring the metaverse’s longer-term opportunities. At the highest level, we view the metaverse as the next step in the natural evolution of the internet. We certainly know Zuckerberg is all-in on the metaverse, renaming his company, formerly known as Facebook, Meta Platforms, to demonstrate that he’s looking beyond social media and the internet as we know it to creating virtual worlds where people can work and play. “It’s not going to be that long before we can create scenes in perfect fidelity,” Zuckerberg said Monday on a call with media about the company’s virtual reality efforts. Meta also makes the headsets to access the metaverse. In another take, the visionary Nvidia (NVDA) CEO Jensen Huang gave us his view of what the metaverse is — he calls it the omniverse — when answering a question on their fiscal year second quarter 2022 earnings call. He said, “The omniverse is essentially an overlay of the internet, an overlay of the physical world and it’s going to fuse all these different worlds together long-term.” If we think about it, full immersion can essentially be achieved by tapping into our senses, which we perceive as our reality. So in theory, they can be hijacked to offer a different reality. With that in mind, let’s look at some of the Club portfolio companies currently working to enable those VR experiences. Meta Platforms In our view, Oculus — which then-Facebook purchased for $2 billion in 2014 — has the greatest opportunity to lead the headset market not only because of its attractive price but more importantly because unlike others, it is a standalone device. Users do not need a high-powered computer to enjoy the VR experience. While Meta’s VR headset and others are clunky, the goal is to jam pack that technology into the equivalent of reading glasses, or even further down the line, contact lenses . On the software side, Meta is working to provide tools for creators to design their own digital worlds with Horizon Worlds . Nvidia Nvidia is now much more than a hardware company. While its processors help run the cloud and high-level gaming graphics, Nvidia is also helping developers build out their own corners of the metaverse via its Omniverse Enterprise line, which Huang has previously described as “a simulator that’s physically accurate and physically based.” Microsoft Microsoft (MSFT) is looking to enter the hardware space as well via its HoloLens offering. However, it appears to be more interested in augmented reality, which overlays digital imagery in a real world environment, than virtual reality with a focus on the manufacturing, healthcare and educational end markets. Alphabet Google Glass was one of the first entrants to the consumer AR market. However, the launch was something of a flop as the glasses were lacking software. Nevertheless, the company continues to work on the platform and given Google-parent Alphabet ‘s (GOOGL) resources and artificial intelligence prowess, we are continuing to monitor their progress on this front. Apple There isn’t much to point to here — but rumors are swirling that we could see a headset from Apple (AAPL) in the next year or two. As far as software, Apple has also been slowly been rolling out augmented reality developer tools as well. Then there are the players building out the physical environments upon which the metaverse will live: the cloud. These massive data centers will store and process the infinite bytes of data that will be the metaverse. The hyperscale cloud storage providers : Amazon ’s (AMZN) Amazon Web Services, Microsoft’s Azure, Google Cloud The chip makers that process the data : Nvidia, Advanced Micro Devices (AMD), Marvell Technology (MRVL) and Qualcomm (QCOM). Bottom line While it’s difficult to peg just how large the metaverse opportunity is, we believe that understanding the end goal and thinking about the opportunity holistically, will help investors better position long-term portfolios. We advise investors is to find the companies that are already established, trading at attractive valuations based on the businesses they are in today and then considering the investments they are making to be a part of the metaverse as something that may pay off down the line. The most obvious example is, of course, none other than Meta Platforms and we’re looking forward to Cramer’s “Mad Money” interview with Zuckerberg, running Wednesday evening. Given that Meta is already established and highly profitable, we think members should view the company’s metaverse initiative as an embedded bet on the future, especially given the company’s very reasonable (too low in our opinion) roughly 13x forward GAAP earnings per share. (Jim Cramer’s Charitable Trust is long META, NVDA, MSFT, GOOGL, AAPL, AMZN, AMD, MRVL and QCOM . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Facebook is opening up Horizon World, its virtual reality world of avatars, to anyone 18 and older in the U.S. and Canada.
Facebook is opening up Horizon World, its virtual reality world of avatars, to anyone 18 and older in the U.S. and Canada.

Facebook is opening up Horizon World, its virtual reality world of avatars, to anyone 18 and older in the U.S. and Canada.

Courtesy of Meta

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