3 Unstoppable Metaverse Stocks to Buy in 2022

Today's technology is enabling virtual worlds for people to meet, play immersive games, and even conduct business. More commonly, this virtual world concept is called the metaverse. Much of the details of how all this will come about are up in the air, but savvy investors know this is a trend that shouldn't be ignored. There are a number of ways to play metaverse trends, but betting on solid companies with a history of success that could benefit from metaverse tailwinds is a great way to profit.

We asked three Fool contributors to provide their favorite stock that will win regardless of how the metaverse materializes. They came up with Nvidia (NVDA -3.33%), Qualcomm (QCOM 1.41%), and Autodesk (ADSK -1.34%).

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Nvidia: Powering the metaverse and so much more

Danny Vena (Nvidia): There's no denying the potential the metaverse represents. That said, it could take years or even decades for it to reach escape velocity. For that reason, investors looking to capitalize on the metaverse should narrow their focus to industry leaders that have a thriving business, secular tailwinds, and a large addressable market -- aside from any opportunity presented by the coming digital realm. One company that passes that test with flying colors is Nvidia.

The pioneer of graphics processing units (GPUs) is the undisputed industry leader, boasting a dominant 83% share of the discrete desktop GPU market. Nvidia's consistent innovation makes its processors a must-have for any serious gamer. This led to record gaming revenue that surged 61% in fiscal 2022 (ended Jan. 30, 2022). 

Parallel processing is the secret sauce that gives GPUs the ability to process a multitude of complex mathematical calculations at lightning-fast speeds -- and no company has been able to harness this raw power better than Nvidia. This will no doubt come into play when creating the graphic reality of the metaverse.

Then there's the data center segment, which supplies processors for artificial intelligence applications, cloud computing, and data centers. Investors might be surprised to learn that Nvidia is also the leading provider of chips used in cloud computing. Its extensive customer list includes such names as Amazon Web Services (AWS), Alphabet's Google Cloud, and Microsoft Azure, among many others. Nvidia's data center segment also produced record-setting revenue that jumped 58% last year. 

The success of Nvidia's two largest business segments helps illustrate the strong trends fueling its growth, but the company has barely scratched the surface of an enormous opportunity. Nvidia generated record revenue of roughly $26.9 billion last year, but that's a drop in the bucket in terms of its total addressable market, which management estimates will grow to $250 billion by 2023. 

This provides investors with a solid foundation of success upon which to bide their time while they wait for the metaverse to slowly materialize. That said, given Nvidia's expertise in graphics processing, the metaverse will represent a natural extension of its existing business, powering everything from augmented reality (AR) and virtual reality (VR) devices to the data centers that will house these virtual spaces.

Even without the metaverse, Nvidia is deserving of a place in a diversified portfolio. The metaverse will merely provide patient investors with a little something extra.

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Qualcomm: This chip company has made a critical metaverse connection

Will Healy (Qualcomm): Most investors know Qualcomm as the company that makes the chipsets in their smartphones. While that remains its largest segment, it has expanded its scope of connected devices in recent years.

One area of focus is the metaverse. Meta Platforms chose Qualcomm to provide the chipset for its Oculus Quest 2 VR headset. Moreover, on the company's first-quarter 2022 earnings call, Qualcomm touted its leadership in AR and VR devices that it has enhanced by cultivating key partners.

At CES, it announced a collaboration with Microsoft to design custom AR chips. Additionally, Qualcomm has opened an extended reality (XR) lab in Europe. It will focus on research and development in areas such as hand and gesture control and 3D mapping.

Qualcomm's emphasis on research and development continues to bolster its financials. In its first quarter of fiscal 2022, Qualcomm reported $10.7 billion in revenue, 30% more than in the year-ago quarter. This led to a Q1 net income of $3.4 billion, an increase of 38% year over year. Qualcomm limited expense growth to 20% during that period, helping to boost earnings.

That rate of increase appears set to continue. For the second quarter, Qualcomm forecasts revenue between $10.2 billion and $11 billion. This would represent a 34% increase at the midpoint.

Such a performance may help explain why Qualcomm stock has avoided the sharp decline that has hit many other tech growth stocks. Since reaching its 52-week high in early January, it has dropped by just over 10%. Additionally, Qualcomm has risen by 14% over the last year, closely approximating the S&P 500's performance.

Furthermore, it trades at a P/E ratio of just over 19. This is far below peers like Apple, which sells for 28 times earnings. Given its rapid growth and successes in the metaverse and other areas of tech, Qualcomm looks like a bargain that metaverse investors should not ignore.

Image source: Getty Images.

Autodesk: A practical tool utilizing the metaverse

Brian Withers (Autodesk): Founded in 1982, AutoDesk is in the business of computer-aided design. But the company has come a long way from its original 2D product that digitized the pencil-and-paper drafting process. Today, the company has over 50 software modules that work seamlessly together to support the construction industry, product design and manufacturing, and even media and entertainment. As far as the metaverse, the company has been a pioneer in 3D design and enables what it calls building information management, or BIM.

The company describes BIM as a "holistic process of creating and managing information for a built asset." Think about all of the people involved with a building project from its initial inception to supporting and maintaining the facility after construction is complete. Whether you are on the design team, in the field during construction, or responsible for ongoing maintenance, the BIM process allows you to access the information you need to perform you jobs in a centralized platform. Autodesk's software even allows designers to simulate people flow and view the design via VR headsets.

The possibilities to create virtual renderings of future buildings and products or 3D media are limitless. But let's look at why this company could be great for investors, too. The company has strong growth metrics and financial stability.

Data source: Company quarterly earnings presentation. QOQ = quarter over quarter. YOY = year over year.

From the table above, you can see the double-digit growth in the top line and remaining performance obligations (the sum of all current contract value not yet completed). Free cash flow has bounced around a bit, but the company is targeting to have $2.4 billion in annual cash flow in fiscal 2023 and is well on the way to delivering on that goal.

The stock is a bit expensive with a price-to-sales ratio of 11, but with its history of market-beating performance, it's worth the premium. Regardless of how the metaverse is built, Autodesk should continue to perform for investors over the long term.