Please ensure Javascript is enabled for purposes of website accessibility

2 No-Brainer Metaverse Stocks to Buy Right Now

By Harsh Chauhan – Jan 4, 2022 at 5:52AM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These tech companies could win big from the metaverse.

The metaverse is the buzzword of the moment in technology after Meta Platforms announced in October 2021 that it plans to bring this concept to life so that people can experience immersive content in three dimensions instead of simply looking at two-dimensional objects on a screen.

From gaming and entertainment to work and education, the coming metaverse is expected to touch several verticals and blur the lines between real and virtual worlds. As a result, the metaverse is expected to create a massive revenue opportunity running into trillions of dollars, according to estimates from various analysts and investment firms.

Apple (AAPL 1.19%) and Zoom Video Communications (ZM 3.68%) are two stocks with the potential to take advantage of this increased interest in the metaverse. Let's see why that may be the case and why it may be a good idea to buy these two tech stocks before the metaverse takes full effect.

Person using a virtual reality headset.

Image source: Getty Images.

1. Apple

Apple has made billions from developing and selling iPhones and iPads, as well as providing a slate of services (music, TV, gaming, and fitness, for example) related to its various tech products. The strong appeal of Apple's products and services places it in a solid position to tap into the metaverse with the help of a new device. The company is reportedly working on augmented reality/virtual reality (AR/VR) headsets that could be launched in 2022, according to noted Apple analyst Ming-Chi Kuo.

What's more, Apple recently hired an executive from Meta Platforms' AR division, providing further indication of the tech giant's interest in this space. Kuo points out that Apple is also developing a second-generation AR/VR headset that could be launched in 2023 and significantly boost the company's sales. Kuo predicts the first-generation headset could sell 2.5 million to 3.5 million units in 2023 followed by 10 million units of the second-generation headset.

Don't be surprised if those estimates end up being too conservative. At the beginning of 2021, the company had an active installed customer base of more than 1.65 billion devices. That presents a huge group of potential Apple customers around the world to cross-sell its headsets to. 

Additionally, the headset is going to be one of the first points of contact for people looking to experience the metaverse. Apple is reportedly working on providing an immersive experience with a device that's light, powerful, and likely to be equipped with high-resolution displays, which could make it a popular choice among customers.

It is also worth noting that Apple's entry into the AR/VR headset market would come at the right time. International Data Corp. (IDC) estimates that overall shipments of AR/VR headsets could jump from 9 million units in 2021 to 50 million units by 2025. A potential entry into the metaverse gives investors another solid reason to buy Apple stock. The company is already dominating the 5G smartphone market, and it won't be surprising to see it do the same in AR/VR headsets.

2. Zoom Video Communications

Zoom Video Communications may not immediately come to mind when discussion of the metaverse arises, but it does have a place there. It's been speculated that the metaverse could erase the lines between a virtual and a real office. Bill Gates, for instance, recently wrote that virtual meetings would move from two-dimensional images to digital avatars within a three-dimensional space in the coming years thanks to the metaverse. In other words, the metaverse will be where companies will eventually be hosting meetings.

At first, this doesn't look like good news for Zoom as it provides a video-conferencing service that allows us to communicate digitally with co-workers, teachers, or fellow students. The metaverse could deliver a blow to Zoom as people will be able to communicate with each other in a virtual office or school with the help of headsets, removing the need for video conferencing.

However, Zoom is already making moves to ensure that the metaverse doesn't render it obsolete. The company announced in September 2021 that its customers would be able to collaborate virtually using Oculus headsets. According to the company's blog:

Zoom and Facebook are working together to offer a more immersive product experience, anticipated next year, using virtual reality (VR).

Facebook's Horizon Workrooms is a new VR app that lets people come together in the same VR room for meetings, regardless of physical distance. This integration will bring Zoom Meetings and Zoom Whiteboard into the VR space using Oculus headsets to enable users to visualize their entire canvas without the need for a large screen.

Zoom points out that customers from both virtual and real worlds will be able to connect with the help of Zoom Meetings, while Whiteboard integration will allow for an improved VR experience that will allow them to pan around and draw objects.

Zoom had more than 512,000 customers at the end of the third quarter of fiscal 2022, up 18% from the prior-year period. These customers had a minimum of 10 employees, indicating that Zoom has built a solid customer base to which it can cross-sell its metaverse-related applications. It is also worth noting that customers are spending more money on Zoom's offerings as evident from the 94% year-over-year increase in the number of customers contributing more than $100,000 in trailing-12-month revenue.

Zoom Video Communications could eventually turn out to be a metaverse winner thanks to its huge customer base and new solutions that could help clients conduct meetings in a virtual world. That's why investors looking to benefit from this emerging technology trend should have Zoom stock on their radar.

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. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Apple, Meta Platforms, Inc., and Zoom Video Communications. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.