Demand for video games has taken off in 2020 as shelter-in-place orders and lockdowns instituted across the globe have kept people confined to their homes, forcing them to look for other ways to entertain themselves.

Video games and e-sports analytics provider Newzoo estimates that the video gaming market could grow nearly 20% in 2020 and hit a size of $175 billion, according to its latest forecast -- $15.6 billion higher than its previous estimate. Newzoo also points out that the market's growth is here to stay, with revenue anticipated to hit close to $218 billion by 2023.

There are various ways to take advantage of this potential growth on offer, from hardware and chip vendors to game publishers. In this article, we are going to take a look at three stocks -- Glu Mobile (NASDAQ:GLUU), Advanced Micro Devices (NASDAQ:AMD), and Corsair Gaming (NASDAQ:CRSR) -- that are primed to benefit from different niches of the video gaming space.

Person using a game controller.

Image source: Getty Images

1. Glu Mobile

The Newzoo report points out that mobile gaming revenue could account for nearly half of the overall market this year. Mobile gaming revenue is expected to jump 25.6% in 2020 to $86.3 billion, up from the previous forecast of $77.2 billion.

Glu Mobile is one of the top bets to take advantage of this impressive growth, as it is outperforming the overall market. The mobile gaming specialist delivered 48% year-over-year revenue growth in the third quarter, bringing its top-line growth for the first nine months of 2020 to 33.6% higher than the prior-year period.

For the full year, Glu Mobile anticipates bookings between $555 million and $560 million. This points toward a potential revenue growth of over 30% for the company this year given that it has a history of converting nearly all its bookings into actual sales. More importantly, Glu Mobile's outlook for 2021 suggests that it could sustain its momentum.

The company anticipates bookings between $595 million and $605 million next year, which would translate into 8% to 10% growth over this year's projected annual bookings figure. But as management pointed out over the last earnings conference call, that 2021 bookings projection doesn't take into account the five new games Glu plans to launch.

What's more, Glu Mobile anticipates growth of 220 basis points to 420 basis points in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2021 compared to this year's projected levels. So Glu Mobile seems on track to deliver improved earnings performance that could lead to more stock upside. Further, an attractive forward earnings multiple of 15 should give investors another reason to consider the stock.

2. Advanced Micro Devices

Advanced Micro Devices has already been flying high as demand for its central processing units (CPUs) and graphics processing units (GPUs) have been taking off. Jon Peddie Research estimates that the personal computer (PC) gaming hardware market could add $3.6 billion in revenue this year to hit a total size of $40 billion, and it is expected to sustain its momentum for the next five years.

Newzoo also estimates that sales of PC games could increase 6.2% in 2020 compared to last year, paving the way for AMD to move more of its latest-generation chips. The chipmaker recently released its latest Ryzen 6000 CPUs, which are reportedly better than market leader Intel's offerings.

More importantly, AMD is expected to continue enjoying an advantage over Intel because of its advanced manufacturing process and the latter's inability to quickly bring competing chips to the market. Meanwhile, AMD is expected to make waves in the GPU space as well with the launch of its next-generation cards, which are expected to give market leader NVIDIA a run for its money.

But these are not the only catalysts that AMD enjoys. The chipmaker is supplying custom processors and graphics cards for the new gaming consoles from Sony and Microsoft, whose sales are expected to take off and trigger a huge upgrade cycle. Newzoo predicts that sales of console games are expected to jump 21% from last year in 2020 -- but investors should remember that the new consoles only launched this month. As such, sales of AMD's semi-custom chips are likely to keep increasing at a nice pace in the coming year and beyond as customers upgrade to the new devices.

Not surprisingly, analyst estimates compiled by Yahoo! Finance predict that AMD's bottom line will grow at a mouth-watering pace in the coming years. But investors should also remember that AMD is trading at 110 times trailing earnings and 47 times forward earnings, so buying into the company's hot earnings growth isn't going to be cheap.

3. Corsair Gaming

Corsair Gaming is the new kid on the block, but it's set the stock market on fire since making its debut in September. The manufacturer of video gaming hardware and peripherals has benefited from an uptick in demand this year and is on track to deliver terrific revenue growth.

Corsair's gamer and creator peripherals business has received a nice shot in the arm from the e-sports market, which is driving increased demand for streaming equipment. Additionally, demand for other PC gaming peripherals such as keyboards, controllers, and mice has ticked up this year thanks to higher hardware demand, as pointed out earlier.

TechNavio estimates that the size of this market could increase by almost $2.8 billion over the next four years. Corsair reportedly controls just over 18% of the peripheral market, which puts it in a solid position to take advantage of the potential growth on offer. On the other hand, Corsair holds nearly a 42% share of the market for PC components such as dynamic random access memory (DRAM) modules, cooling systems, power supply units, and computer cases.

As games become more graphic-intensive and game renderings more life-like, gaming enthusiasts can be expected to upgrade to new graphics cards and other components, as most of them are still running older systems. This could create more demand for Corsair's PC components in the coming years, and help the company sustain its recent momentum.

And finally, with Corsair trading at 40 times trailing earnings and 23.4 times forward earnings, investors won't have to pay a huge premium for the company's terrific growth. This makes Corsair Gaming an ideal video gaming stock for investors looking to buy a fast-growing company at a relatively low valuation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.