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If I Could Buy Only 1 Metaverse Stock, This Would Be It

By Keith Speights – Dec 5, 2021 at 5:52AM

Key Points

  • Nvidia's powerful graphics chips should make it a surefire metaverse winner.
  • The company is already monetizing the metaverse with its Omniverse platform.
  • Nvidia also has great opportunities beyond the metaverse.

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It's the premier "picks-and-shovels" supplier for the technologies shaping our future.

Is metaverse mania upon us? It might seem so at times.

The idea of a next-generation internet supporting 3D virtual worlds isn't anything new. However, Facebook's decision to change its name to Meta Platforms (META 2.33%) and spend billions in building the metaverse has fueled excitement in recent months.

There are many companies, both big and small, that hope to make fortunes in the metaverse. And this presents opportunities for investors to make a lot of money as well. But which stocks will be the most likely winners? If I could buy only one metaverse stock, this would be it.

A magnifying glass over a jigsaw puzzle piece with "metaverse" printed on it with other blank jigsaw puzzle pices.

Image source: Getty Images.

A surefire winner

Meta Platforms stands out as the most visible player in building the metaverse. But Meta CEO Mark Zuckerberg knows that other companies will also play an important role. He even singled out one specific company in Facebook's second-quarter conference call -- Nvidia (NVDA 2.17%).

Zuckerberg said in the July call that "companies like Nvidia that are building a lot of the graphics chips that are going to be really important for a lot of the content that I think is going to be increasingly graphically intense." He's exactly right.  

Powerful graphics chips will a must-have to support augmented reality and virtual reality apps in the metaverse. Nvidia should be a surefire winner, considering that its graphics processing units (GPUs) are already the gold standard for gaming.

While there could be hundreds (and perhaps even thousands) of companies scrambling to develop software for the metaverse, only a handful of players have the resources and expertise to build the chips that will be needed. Zuckerberg readily acknowledged in the call earlier this year that "building those kinds of graphics chips is not a thing that we're intending to get into."

Already monetizing the metaverse

But Nvidia isn't limited to profiting only from its graphics chips. Actually, the company is already monetizing the metaverse.

Nvidia's Omniverse launched earlier this year. Omniverse is a 3D simulation and collaboration platform. It enables designers to create virtual 3D worlds that obey the laws of physics in the real world. Nvidia revealed in its latest quarterly update that over 700 companies are evaluating Omniverse and more 70,000 individual creators have downloaded the platform over the last 12 months. 

BMW is the first automaker to use Omniverse to build a digital twin of a factory. This digital twin enables the company's manufacturing teams to collaborate virtually in designing, planning, engineering, and optimizing systems before a new physical factory is constructed or a new product is introduced. BMW executive Milan Nedeljkovic called Omniverse "a game-changer" that will increase planning efficiency by 30%. 

Nvidia hasn't yet stated exactly how much money it's making from Omniverse, although the company's professional visualization business overall generated revenue of $577 million in the third quarter. However, the company certainly seems to anticipate making a lot of money from its Omniverse platform going forward.

Opportunities in the physical world, too

Another reason why I think Nvidia is the best metaverse stock is that it has big opportunities in the physical world, too. For example, the company's GPUs are widely used in powering data center servers that power artificial intelligence (AI) apps. Nvidia posted record data center revenue of $2.94 billion in Q3, up 55% year over year and making up 41% of total revenue.

Its Nvidia Drive self-driving car technology is another growth driver. The company is even connecting its Omniverse platform with Drive by embedding Omniverse Avatar, a 3D interactive AI assistant.

The metaverse, AI, and self-driving cars could all be similar to the gold rushes of the past. During those gold rushes, it was said that the ones making the most money were those who supplied the picks and shovels rather than the miners themselves. I view Nvidia as the premier picks-and-shovels supplier for the technologies that will shape our future.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights owns shares of Meta Platforms, Inc. and Nvidia. The Motley Fool owns shares of and recommends Meta Platforms, Inc. and Nvidia. The Motley Fool recommends BMW. The Motley Fool has a disclosure policy.

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