Best Gaming Stocks To Buy: Some leisure activities ebb and flow in an annual cycle. Others are trendy for a while and then fade away. Their participants are certainly passionate about the hobby, but their passion doesn’t consume them season after season and year after year.
Then there are the gamers – billions of them worldwide.
This group spans cultures, genders, languages, and ages as they come together to collaborate or compete in the digital universe. Gamers play year-round and for years at a time with seemingly unflagging interest. That means companies able to gain a foothold in the gaming industry have excellent prospects for long-term revenue growth.
So, what are the best gaming stocks to buy?
Gaming Market Is A $300 Billion Industry
The global gaming market is valued at more than $300 billion today, and that figure is expected to increase steadily as new technology adds new adventures for players.
Games featuring Virtual Reality (VR) and Augmented Reality (AR) are especially popular, and they are likely to bring more players in as the metaverse continues to expand.
As more gamers connect in immersive multiplayer worlds, there are valuable opportunities for game developers and retailers. However, the opportunities extend far beyond businesses that create and distribute gaming software.
Gaming hardware, including consoles, specialized graphics chips, and other components, can make or break the gaming experience, which makes their manufacturers critical to the industry’s success.
The ten biggest names in gaming software include these leading developers:
- Sony – revenue from gaming $24.9 billion
- Microsoft – revenue from gaming $16.3 billion
- Nintendo – revenue from gaming $15.3 billion
- Tencent – revenue from gaming $13.9 billion
- Activision Blizzard – revenue from gaming $8.8 billion
- Electronic Arts – revenue from gaming $5.6 billion
- Epic Games – revenue from gaming $5.1 billion
- Take-Two Interactive – revenue from gaming $3.4 billion
- Ubisoft – revenue from gaming $2.5 billion
- Bandai Namco – revenue from gaming $2.0 billion
That doesn’t include all of the gaming-related hardware manufacturers – for example, the companies that produce high-quality graphics chips. The market leaders in that space are Advanced Micro Devices, Intel, Nvidia, and Qualcomm.
Of course, bigger isn’t always better when it comes to investing. In some cases, the really impressive returns come from the fastest-growing stocks. These are the top gaming stocks to buy now if your goal is rapid portfolio growth.
Will Skillz Stock Go Up?
There are more than a billion digital games available online, and the total number of game developers is staggering. Aside from the 2,000+ game development studios found worldwide, there are many thousands of amateur and entrepreneurial game developers attempting to break into the industry.
Generally speaking, just two percent of developers ever make a significant profit on their creations. The vast majority never see a dime, regardless of their game’s quality and the number of players. Skillz saw the problem and came up with a solution that has proven wildly successful. Developers publish their games through the Skillz platform, and players can enter tournaments to win cash prizes.
The prizes are funded through entry fees that Skillz collects – a portion of which goes back to the company. However, the big news for developers is that they get a cut, too – and now that Skillz has 30 million users, many games are finally generating income for their makers.
Skillz has a market cap of $1 billion, and its stock currently trades under $3 per share. That’s a deep discount as compared to the 52-week high of nearly $25 per share.
Many analysts and industry experts don’t think those low prices are here to stay. In fact, a new Skillz project has launched in partnership with the National Football League (NFL), and there is talk of another partnership with the Ultimate Fighting Championship (UFC) brand.
Either or both of these projects have the potential to take Skillz from a relative unknown to a massive success. Some analysts suggest that the Skillz stock price could double in the next twelve months, which – if accurate – means generous returns for those who buy Skillz stock today.
3 Out of Every 5 Game Developers Prefers Unity
The most talented game developers are known for their vision. They create worlds that engage users and keep them coming back for more. However, that’s only possible if developers have the specialized tools necessary to transfer their vision from their imagination to the screen. That’s where Unity Software comes in.
Unity Software offers game development technology that is preferred by three out of every five developers. More than half of all games that were available in 2021 leverage Unity’s tools, and that’s just the beginning.
This software is also popular among filmmakers, industrial designers, and a variety of other creative professionals – particularly since it includes VR and AR capabilities.
Every month, nearly 50 percent of the world population is touched by Unity-powered technology in some way.
As the digital transition continues to expand in both geography and use cases, the role of Unity Software will grow. In 2021, the company delivered a 44 percent increase in revenue to a total of $1.1 billion, and there is extraordinary potential for additional revenue as the metaverse unfolds.
That’s why many analysts and industry experts predict that the company’s current $26.67 billion market cap has no place to go but up – perhaps as much as 83 percent over the next twelve months. For now, shares are trading at just over a third of their November 2021 peak, which means it could be the right time to buy Unity Software stock.
Will Sea Limited Stock Recover?
It’s true that Sea Limited stock lost more than 50 percent of its value in the past year, but its total gain remains over 600 percent. That’s because the Singapore-based company is a leader in the digital economy on multiple fronts, including the lucrative gaming market.
Aside from its e-commerce platform, Shopee, and its fintech division, SeaMoney, Sea Limited has a robust digital entertainment business.
Its number one asset is Garena, the studio that released Free Fire. To date, Free Fire has been downloaded more than a billion times, and despite the fact that it is five years old, it is still an industry leader when measured by quarterly active users.
Sea Limited stock took a hit after the realization that Sea Limited’s digital entertainment business in general – and Free Fire in particular – are likely to see big drops in use this year. The pandemic has finally subsided, and the gamers that became interested during quarantines and stay-at-home orders can now resume their pre-pandemic lifestyles to some extent.
However, though Sea Limited stock is down, it is not out of the game. While the digital entertainment business regroups – which it is nearly certain to do – the e-commerce and fintech divisions can pick up the slack.
Some analysts have suggested that Sea Limited stock may go up 72 percent over the next twelve months. If they are right, now is the time to buy.
Best Gaming Stocks To Buy Now: The Bottom Line
When it comes to the top gaming stocks, Skillz, Unity Software, and Sea Limited are in the higher-risk/higher-potential-reward category. If that’s not your style, there are plenty of alternatives that offer exposure to digital entertainment with less risk – and, of course, lower potential reward.
From a value perspective, some of the best gaming stocks to buy now include Nintendo, Activision Blizzard, and Playtika. Advanced Micro Devices and Nvidia are critical to the gaming industry and have cornered the GPU market, and there are always tech industry leaders like Alphabet (Google) and Microsoft.
Finally, there are a number of exchange-traded funds (ETFs) that focus on the gaming industry. The biggest benefit they offer is instant diversification in every share. Some of the best gaming ETFs include the Global X Video Games & Esports ETF, the Roundhill BITKRAFT Esports & Digital Entertainment ETF, and the VanEck Video Gaming and eSports ETF.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.