2 Tech Stocks to Play Google Inc.'s Focus on Android Gaming

Google made it clear Android gaming would be central to its strategy going forward. Here are two stocks to play the move.

Jul 1, 2014 at 10:45AM

If there's one common theme that stood out to me from Google's (NASDAQ:GOOG)(NASDAQ:GOOGL) 2014 I/O Conference last week, it was Android gaming.

To be sure, Google first unveiled what it's calling the Android Extension Pack (AEP). The AEP helps developers bring modern games to mobile devices, complete with PC-esque features like tessellation and compute shaders. What's more, Google made it clear gaming would serve at the heart of its efforts to capture your living room with Android TV. We were also treated to the first leaked pics of Google's new game controller, which promises to give Android gaming a more console-like feel.

And that makes perfect sense considering we've already established Google Play is serving up stunning growth for the tech giant. And even though Play allows consumers to buy everything from mobile apps and music, to magazines, video, and books, data analytics firm AppAnnie recently revealed revenue from gaming apps alone represented nearly 90% of Google Play's total first-quarter sales.

But buying Google stock isn't the way investors can play Android's gaming aspirations. So where else can you look?

On powering high-quality Android games
First, consider NVIDIA Corporation (NASDAQ:NVDA), a graphics chip specialist for which gaming has long stood a central theme. As NVIDIA pointed out in its official company blog last week, "You couldn't get very far at Google I/O's dazzling kickoff [...] without bumping into our new Tegra K1 mobile processor."

Remember, NVIDIA first showed off the 32-bit version of its Tegra K1 mobile superchip in January. But last week, Google not only revealed NVIDIA Tegra-powered devkits for both Android TV and Android Auto, but also reminded us NVIDIA's Tegra K1 makes possible the incredible 3-D tracking and mapping features in its Project Tango tablet devkit. What's more, Google showed off the following demonstration of Android L's gaming capabilities with AEP running on a 64-bit Tegra K1 reference device:

In the end -- and considering the less-than-stellar adoption of NVIDIA's previous Tegra chips to date -- shareholders should be encouraged today that Google is so closely integrating NVIDIA's next-gen chips into its plans.

On the games themselves
Of course, Android gaming wouldn't be much of a platform without the actual games. In fact, the growth of Google Play games allowed Google to pay out more than four times as much money to developers in 2013 compared to 2012. That growth shows no signs of letting up, with more than 100 million new Google Play user accounts opened over the last six month alone.

And this is where companies like mobile game specialist Glu Mobile (NASDAQ:GLUU) come into play. Glu Mobile, for its part, is still a small-cap stock with a tiny $400 million market cap, and is currently riding a wave of momentum after it announced two of its games -- Deer Hunter 2014 and Eternity Warriors 2 -- are already available for Android TV. This is particularly exciting for investors as it gives Glu Mobile a way to expand its scope beyond just mobile devices and into millions of living rooms around the world.

But one word of caution: The economics behind the "freemium" game industry aren't exactly attractive, so it's no surprise Glu Mobile isn't profitable on a trailing 12-month basis. And though it does expect to achieve adjusted net income between $1.4 million and $3.2 million when all is said and done in 2014, keep in mind that's excluding more than $11 million in anticipated costs related to stock-based compensation, amortization of intangible assets, and earnout charges from its previous acquisition of Blammo games. That also excludes costs related to its recently completed acquisition of Dash series game maker PlayFirst.

But investors don't seem to mind, because Glu Mobile is effectively using these acquisitions to shuffle for position in its market, which data analytics firm AppAnnie recently reported was responsible for 98% of Google Play Games' revenue as of last month. Over the long run, if a small-cap like Glu Mobile can grab any meaningful share of that revenue and ultimately translate it to sustainable long-term profits, the stock could handsomely reward investors from here.

Leaked: Apple's next smart device (warning, it may shock you)
If you're looking for other disruptive small-cap stocks, you're in luck! Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But another small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Steve Symington owns shares of Apple and Nvidia. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Nvidia. The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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