The video game market is vast and has blown up in recent years with the introduction of new earning opportunities, including mobile games, microtransactions (in-game purchases), cloud gaming, and more. Video games are an ever-expanding industry that allows companies to profit from constant demand for new titles and upgraded hardware.
Data from Statista says the industry is worth $334 billion and is projected to have a compound annual growth rate of 9% through 2027.
As a result, many of the biggest names in tech have ventured into this consistently growing sector. Even if gaming isn't a company's main business, it can still benefit significantly from the market's reliable growth, and so can investors. Video game stocks are excellent options to hold over many years.
Here are three top video game stocks to buy in October.
1. Apple
Apple (AAPL 0.75%) might not be the first company you think of in a discussion about gaming, but it is the world's third-largest video game company after Tencent and Sony. It massively profits from the industry through its App Store, where mobile games accounted for 66% of consumer spending in 2022.
The App Store has become one of the most lucrative parts of Apple's business, with the company announcing in May that the platform had generated over $1 trillion last year. The majority of that went to developers. However, the digital marketplace's success has led services to become Apple's second-highest-earning segment, behind only the iPhone.
What's more, services revenue growth is outpacing the company's smartphone business, with a 14% rise in net sales in 2022 compared to 7% for the iPhone.
The company will launch its first virtual/augmented reality (VR/AR) headset next year, which could open a new market of gaming opportunities. Alongside a long history of consistent stock growth, Apple is an attractive way to invest in video games.
2. Microsoft
Microsoft (MSFT 1.05%) is just after Apple in the list of world's largest game companies, coming in fourth. But it plans to leapfrog the iPhone company and become the third largest by acquiring games developer Activision Blizzard in a deal worth $69 billion.
The purchase was first announced in January 2022 and has been held up by a lengthy regulatory process and antitrust concerns. Microsoft has needed approval from regulators worldwide, with the U.K. being the last authority needed to sign off.
It's inching closer to completing the deal after the U.K. gave preliminary approval last month, releasing a statement saying the company had "substantially" addressed its concerns.
Microsoft is already one of the biggest names in gaming with its Xbox brand, and acquiring Activision will give it access to a valuable library of content, which will potentially attract millions of new subscribers to its Xbox Game Pass service and cause an uptick in console sales.
So it's not a bad idea to invest in Microsoft stock before the merger.
3. Advanced Micro Devices
Advanced Micro Devices (AMD 2.55%) has garnered much attention this year thanks to its growing potential in artificial intelligence. However, the company has also had a crucial role in video games for years. Its chips are popular among PC gamers and are used to power custom-built gaming computers worldwide.
The company has suffered from a downturn in the PC market over the past year, as inflation hikes have caused reductions in consumer spending. But it could see boosts in profits over the long term as the industry recovers.
AMD is an attractive gaming stock with its diversified position in the sector, which also includes consoles. The company exclusively supplies chips to Sony's PlayStation 5 and Microsoft's Xbox Series X|S. The success of these consoles led to a 21% year-over-year rise in gaming revenue for AMD in fiscal 2022.
The company's gaming segment hasn't grown as much in the first half of 2023 as last year, but rumors of a PlayStation 5 "Pro" version have swirled for months, with similar expectations for an upgraded Xbox Series X to be released in 2024.
The updated consoles would align with past mid-generation console releases from both companies and could bolster earnings for AMD next year. It could be a smart move to add the company's stock ahead of the potential console launches.
