The metaverse is defined as a digital, three-dimensional world that’s immersive and accessible in real time by an unlimited number of people, allowing for social interactions, commerce, and more. Right now, this is more science fiction than reality. However, various tech companies are trying to bring the entirety of the vision to life.
Patience is key here, because the metaverse could take a decade or more to develop. But this is actually great news for investors. The metaverse is still in its early stages, so it’s not too late to invest in metaverse stocks. Let’s look at ways to invest in this exciting space and some of the companies that are positioned to profit from the trend.
Investing in the metaverse
How to invest in the metaverse
Investors can approach this secular trend from multiple angles. Consider the following non-exhaustive list of potential layers to the metaverse:
- Immersive hardware: Right now, metaverse hardware is fairly limited to virtual reality (VR) headsets. Popular consumer products currently only incorporate the senses of sight and sound. But metaverse hardware products could also incorporate other senses, such as touch via haptic devices, in the future.
- 3D creation software: Whether it’s building the virtual world’s scenery or creating items that can be bought and sold, the metaverse needs software solutions for content creation.
- Interactive platforms: In the same way people visit websites via the internet, there will need to be virtual worlds -- interactive platforms -- to visit in the metaverse.
- Connectivity: The connection will need to be lightning-fast to accommodate unlimited metaverse participants in real time. And computers will need to be powerful to render 3D smoothly.
- Semiconductors: In the same vein, the metaverse’s computing power requirements will be massive and require advancements in semiconductor technology. The metaverse also will generate an enormous amount of data that will need to be stored.
- Security: Once people are enjoying more activities in the metaverse, their identities and finances will need protection, making cybersecurity increasingly indispensable.
With so many aspects to choose from, there’s likely a metaverse stock to fit any investor’s style and risk tolerance.
Semiconductor
Best metaverse stocks to buy in 2024
Best metaverse stocks to buy in 2024
As previously mentioned, it could be many years before the metaverse exists in its fullest form. So the best metaverse stocks to buy today are companies that are already thriving but whose growth will be boosted by the metaverse. Here are some top considerations, in no particular order:
1. Meta
1. Meta
Formally known as Facebook, Meta Platforms (META -2.28%) is responsible for bringing the metaverse trend to the forefront of investors’ minds. Most of the company’s revenue is generated by ads on the Facebook and Instagram apps. However, Meta Platforms has another part of the business called Reality Labs where it sells hardware devices and VR content. Its Oculus VR headsets have collectively sold more than any other on the market, making Meta a top stock for immersive hardware. Moreover, the company is investing billions of dollars to create software and content for augmented reality and VR applications -- more than what most other metaverse companies could dream of. Therefore, if there's a future in the metaverse, Meta will likely play an important part.
2. Roblox
2. Roblox
Roblox (RBLX -4.46%) is already a go-to virtual world that could be an early-stage version of a metaverse platform. Musicians such as Mariah Carey and celebrities such as Paris Hilton have already hosted live events on Roblox’s platform, perhaps signaling that these are gaining mainstream appeal. A couple of years ago, the platform primarily resonated with U.S. users younger than 13, but it’s developed into a global company with an increasingly expanding set of older users. The metaverse will likely have multiple interactive platform destinations. But with more than 66 million daily active users already, Roblox has a big head start.
3. Microsoft
3. Microsoft
Investors don't think of Microsoft (MSFT -1.96%) as a metaverse stock but its artificial intelligence (AI) capabilities could prove invaluable to its development. Both Meta and Roblox have said that user-generated content is needed to help bring the metaverse to life. And generative AI applications are swiftly simplifying content creation for everyone. Leading AI company OpenAI partnered with Microsoft because its cloud-computing product Azure provides the necessary power and storage to scale AI applications to a massive audience. Therefore, its AI trailblazing and its powerful cloud-computing product could make Microsoft a metaverse beneficiary.
Artificial Intelligence
4. Unity
4. Unity
Unity Software (U -3.48%) is a leader in the 3D software space. The company estimates that about half of all 3D content today is made with its software. As metaverse content is created, it’s reasonable to expect a large portion will involve Unity in some way. It’s also reasonable to believe the company can take market share from competitors due to its unique value proposition. Two of its products -- Unity Personal and Unity Student -- are offered free to content creators who are just starting out. As these creators succeed, it’s likely they will become paying Unity customers.
5. Cloudflare
5. Cloudflare
Content delivery network (CDN) Cloudflare (NET -3.65%) is designed with speed in mind. The company claims its network can deliver content in 50 milliseconds or less to 95% of the world’s population. That scale will be helpful as the metaverse ramps up. But, as previously noted, the metaverse will have other needs, and Cloudflare can address some of these as well. For example, the company already offers cybersecurity solutions, blocking 136 billion daily threats. And, in 2021, it launched a data storage product that may help to meet the metaverse’s outsized data storage needs.
Metaverse ETFs
Metaverse ETFs to consider
Maybe you can’t decide which metaverse stock to buy, or maybe you want broader exposure than a single stock. Consider buying a metaverse-focused exchange-traded fund (ETF). One option is the Roundhill Ball Metaverse ETF (METV -2.21%), which includes all five of the stocks already listed here plus dozens more, providing instant diversification for shareholders.
Another possibility is the ProShares Metaverse ETF (VERS -4.03%). Of the five stocks listed here, Cloudflare is the only one the ProShares Metaverse ETF doesn't hold shares of. It has fewer holdings than the Roundhill Ball Metaverse ETF. But its expense ratio (fee) is a smidge lower, which might make it more attractive to some investors.
Yes, unlike stocks, ETFs are subject to ongoing fees, and these two ETFs are no exception. Therefore, investors need to be sure they know how to invest in ETFs before buying shares.
Exchange-Traded Fund (ETF)
Where can I buy metaverse stocks?
Where can I buy metaverse stocks?
To buy stocks and ETFs, investors need to have a brokerage account. The best brokerages are extremely user-friendly, allowing accounts to be opened with no minimum deposit and also offering zero-fee trades.
Related investing topics
Metaverse cryptocurrencies
What about metaverse cryptocurrencies?
There’s still a long way to go with the metaverse trend, and it could take various paths. One question is whether the bulk of the metaverse will be built by corporate entities or with decentralized solutions such as blockchains and cryptocurrencies. For this reason, we’ve already looked at the corporate entities. But, since the future is uncertain, it’s worth keeping at least a couple of cryptocurrencies on your radar as well because the technology could prove useful in the metaverse's development.
Cryptocurrency
The first is Theta (THETA -9.75%). Being a content delivery network, Theta is conceptually similar to Cloudflare. However, it could theoretically deliver metaverse content faster because it’s physically stored closer to the consumer. The project started as a way to livestream VR video games and has quickly captured the attention of Alphabet (GOOG -1.8%)(GOOGL -1.82%) and Samsung. Theta’s CDN idea is also patented, mitigating the competitive risk from other decentralized solutions.
The other cryptocurrency to watch is Arweave (AR -12.73%). This team is building what it calls the “permaweb,” and its mission is to “preserve knowledge from our past, present and future with immutable information storage.” Solana (SOL -14.0%), another cryptocurrency project with major data storage needs, has partnered with Arweave, as has smart contract crypto platform Avalanche (AVAX -6.29%) -- major votes of confidence in Arweave’s capabilities.
Of course, Arweave isn’t the only decentralized project thinking about data storage. But its endowment pool payouts encourage long-term data storage, and that’s a clear differentiator here. In many other cases, users pay crypto miners up-front fees to store data for a limited period of time. By contrast, Arweave incentivizes miners to store data forever by gradually paying over time from an endowment pool that users pay into. This long-term solution to the problem could make Arweave a winner here.
The question between centralization and decentralization highlights once again how early we are in the metaverse trend. For this reason, it’s important for investors to stay engaged and curious when looking for ways to invest. New developments will reveal more opportunities over the long haul.
