Nvidia vs Facebook: Which Stock Will Rule the Omniverse?

Both Facebook and Nvidia have big plans for the omniverse: Nvidia launched its Nvidia Omniverse platform as a cloud-based platform to help 3D production workflows adopted from Pixar. Facebook is bundling its messaging and social platforms with its Oculus VR platform for the Facebook Metaverse.

So, which is the better investment between Facebook, Inc (NASDAQ:FB) and Nvidia Corporation (NASDAQ:NVDA)?

First let’s begin by understanding what an omniverse is.

What Is the Omniverse?

In physics, an omniverse is a four-dimensional universe – it’s essentially a “beyond the limits” region of our universe that extends into the temporal fourth dimension. 

You can think of Facebook and Nvidia’s version a little more simply as virtual worlds. The applications of these virtual worlds are innumerable. For example, bumping into colleagues virtually in a virtual cafe during your work day. From gaming to business, the opportunities are enormous if consumer attention can be seized.

Nvidia is powering the hardware while Facebook is planning to be the software for the omniverse as Nvidia’s CEO calls it or the metaverse as Zuckerberg defines it. 

By offering the infrastructure for this technology to exist, Nvidia is leveraging its powerful RTX Series GPUs to make it easier than ever to work across boundaries, leveraging massive computing processes. It’s the next evolution of gaming, cinema, and animation; all areas in which Nvidia has deep roots.

Nvidia’s Omniverse Plans

Nvidia wants to be more than a semiconductor hardware manufacturer and marketer. It continues pushing along the same lines as major companies like Microsoft (MSFT) and Google (GOOG). Now it’s elbowing its way into space that includes Adobe (ADBE), and Intel (INTC).

These are necessary moves though – the rise in crypto miners sparked an arms race in GPUs. Nvidia and AMD aren’t the only two companies in the game. Technology titan, Apple (AAPL), is working to create its own in-house chips.

The rise of blockchain technology is another potential growth lever for Nvidia (NVDA).

Just as Facebook (FB) expanded beyond social media and Google expanded beyond a search engine, Nvidia needs to expand to the omniverse to sustain its impressive growth trajectory.

Is Nvidia Stock Worth the Price?

Nvidia’s stock outperformed the S&P 500 over the past year, and more importantly, it increased margins (63.75 percent) over direct rivals AMD (45.71 percent) and Intel (55.59 percent). Its fiscal 2022 second quarter revenue of $6.51 billion is up 68 percent from the prior year’s period.

In fact, both gaming and data center revenue is up this year despite the entire industry facing a shortage due to the pandemic. That’s driving prices up for Nvidia’s graphics cards (if you can find one), but the secondary market profits don’t go into the company’s coffers.

Industry trends are acting as tailwinds for Nvidia – its latest RTX chipset has been largely sold out for a full 12 months past its release date. Even the best video game console companies can’t say that. Demand for crypto mining and 3D rendering shows no signs of waning either.

In-House Chip Manufacturing A Threat To NVDA?

Although its latest graphics cards are flying off shelves, Nvidia faces stiff competition. Both AMD and Intel are ramping up their microchip and data center capabilities. Increasingly Silicon Valley companies are starting to manufacture their own chips.

Increased competition from Taiwan and China is also putting a strain on Nvidia’s growth capabilities in the hardware market.

There may be long-term consequences stemming from the company’s forays into software. Its Shield ecosystem GeForce Now still hasn’t picked up as much steam as Valve’s Steam platform.

So where does Facebook fit into all of this and how is the omniverse different to the metaverse?

What Is a Metaverse?

The computer-animated comedy film, Ralph Breaks the Internet, portrayed a depiction of the metaverse. It’s a future iteration of the internet that blends gaming and the modern web into immersive virtual experiences.

While it may sound far-fetched, lots of examples of this already exist. Take Roblox Corp (NYSE:RBLX) for example. The popular gaming company grew to a $50 billion market capitalization in no small part due to a kid-friendly metaverse.

From Second Life to Animal Crossing and World of Warcraft, the gaming world is already filled with successful case studies in creating a metaverse. Big tech companies are simply taking it a step further by implementing modern technologies like AI, VR, AR smart glasses, motion tracking, and mobile devices to blend the real and virtual worlds.

One such company is Facebook.

Facebook’s Metaverse Plans

Facebook wants its metaverse to be how you interact with these virtual worlds. It’s not competing directly with Nvidia but instead is emphasizing its software edge and growing into hardware development.

The company developed Facebook Portal, bought Oculus to get into VR and partnered with Ray-Ban on its AR hopes. Many are curious how this will differ from the disastrous AR glasses releases from Snap and Google.

Zuckerberg is confident his social platform has the necessary ingredients to create a virtual portal into the modern world. The goal is to create a clean and consistent experience from virtual reality to your phone and real-world interactions.

But looming antitrust heat from Capitol Hill may prove to be a thorn in the company’s side.

Is Facebook Stock Too High?

Facebook is hovering around a trillion-dollar valuation, and there’s plenty of growth room, considering its revenue sources. Much of the company’s nearly-$30 billion-per-quarter of revenue comes from advertising dollars.

The company led the fabled FANG index for a decade after going public, and it quickly became one of the largest companies in the world by revenue and market cap.

Of course, it may have plateaued for the near-term future. Regulatory action continues to hang over the company’s head as the Federal Trade Commission dropped and refiled legal action against the company. While the company is beloved in the long run, the short-term gains could be short.

Nvidia vs Facebook Stock: The Bottom Line

Nvidia and Facebook are battling to create the next big thing in technology. It’s an interactive, all-encompassing fusion of virtual and real world being called both the metaverse and omniverse. What it really boils down to is watching how Big Tech adapts to survive the next decade.

Both stocks are solid buys, although much of their gains through splits were already realized. There’s still plenty of juice left to squeeze, and even antitrust action won’t fully cripple investors.

Regardless of which company ultimately controls it, we’re clearly headed toward a future with even more tech integrated into society than today. I hope you’re ready for it.

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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.