You might think the metaverse is sort of like the movie Field of Dreams. In the movie, Kevin Costner's character hears a voice that says, "If you build it, he will come." Costner's character then proceeds to construct a baseball field on his Iowa corn farm to the consternation of some people in his community. But the story ends well.
Several companies are taking a similar step of faith by investing heavily in building the metaverse. They're betting that lots of people across the world will be attracted to a virtual world.
We don't know yet how the metaverse story will end. It's possible that some companies will be big losers along the way. However, there are others that don't have to wait on the metaverse to be successful. Here are three metaverse stocks that are already money machines.
Image source: Getty Images.
1. Meta Platforms
Meta Platforms (META 2.98%) exudes so much optimism about the future of the metaverse that the company changed its name from Facebook to reflect its metaverse efforts. It's spending billions of dollars to develop a full-blown ecosystem for the metaverse, including both hardware and software.
The good news for investors is that Meta has plenty of money to put on the line. Meta made over $112 billion in revenue over the last 12 months. Its profits during the period topped $40 billion. The company generated free cash flow of close to $26.5 billion. Meta sits on a cash stockpile of $58 billion. Money machine indeed.
Nearly all of these impressive financial results stem from advertising on Meta's social media platforms. Facebook, Instagram, Messenger, and WhatsApp continue to be widely used. The company is also launching new ways to monetize its platforms. For example, investors cheered Meta's recent move to allow Instagram creators to sell access to exclusive Lives (real-time broadcasts) and Stories (images and videos that disappear after 24 hours).
But Meta believes that its future fortunes lie primarily with the metaverse. In July, CEO Mark Zuckerberg said, "In the coming years, I expect people will transition from seeing us primarily as a social media company to seeing us as a metaverse company." Meta shouldn't have a problem funding this transition.
2. Nvidia
Nvidia (NVDA 3.65%) won't have to wait to make money from its metaverse initiatives. The company is already marketing Omniverse, a platform for 3D simulation and design collaboration.
Even before Omniverse launched, though, Nvidia was rolling in the dough. And it still is. The company generated revenue of more than $24 billion over the last 12 months with earnings of more than $8 billion. Nvidia's free cash flow during this period approached $6 billion. The technology leader reported cash, cash equivalents, and marketable securities of more than $19 billion as of Oct. 31, 2021.
Nvidia makes roughly 45% of its revenue from graphics processing units (GPUs) used in gaming. However, its GPUs are also used in powering data center servers. This business generates around 41% of total revenue.
The metaverse could prove to be a gold mine for Nvidia over the next decade and beyond, though. Nvidia's Omniverse seems likely to continue gaining momentum. Its GPUs should also enjoy a massive surge in demand if the metaverse delivers on its potential.
3. Adobe
Adobe (ADBE 1.29%) might not be one of the first stocks that come to mind when you think about the metaverse. However, the company "is the best software play for the metaverse," in Jefferies analyst Brent Thill's opinion.
Over the last 12 months, Adobe raked in revenue of nearly $15.8 billion. Its profits totaled $4.8 billion. The company's cash position stood at $5.8 billion as of Dec. 3, 2021.
Adobe's digital media segment is its biggest moneymaker. This segment includes the company's Creative Cloud subscription service for software used in designing, creating, and publishing rich content. It also includes the Document Cloud service featuring its Adobe Acrobat product line. Adobe's digital experience segment, which focuses on solutions for enterprise customers to improve shopping experiences and provide business intelligence, is also growing quickly.
Look for Adobe to stake its claim in the metaverse over the coming years. The company already markets Aero, a product used in developing augmented reality experiences. CEO Shantanu Narayen believes that Adobe's products will be ideal for developers creating content for the metaverse.
