How Could the Metaverse Affect NVIDIA, Disney, and Meta?

Lately, anyone watching the tech industry has come across a new buzzword. The ‘metaverse’ seems to have quickly made its way into contemporary business discourse, but many investors are unsure what exactly it means, and how this new technology could affect certain key stocks.

What Is the Metaverse?

Although there is some disagreement on the exact nature of the metaverse, the term can generally be understood to mean a new sort of all-encompassing digital experience that will integrate cryptocurrencies, virtual reality, social media, and gaming. Some are predicting that the metaverse could in fact become an alternative world to which people will retreat to avoid the problems of reality.

If this new technology lives up to expectations, it could have a huge impact on the tech industry and the economy as a whole. Which companies are already planning ahead?

Facebook’s Shift

Social media giant Meta’s (FB) name change may be one of the primary reasons that this new concept has gained so much traction in the past few weeks. With headlines across the world spreading the news of Facebook’s transformation to Meta, many were wondering about the origin of the firm’s new moniker.

In October, CEO Mark Zuckerberg shared his vision for the metaverse and how Meta will take part in its formation. The company’s name change signified its intention to be the ‘face’ of this new field of technology, which does not fully exist yet. Zuckerberg emphasised that thus far, only the building blocks of this potentially revolutionary virtual reality exist. 

One of the areas Meta will be focusing on in its metaverse development endeavors is that of VR gaming. Some analysts estimate that the firm sees the wider adoption and usage of virtual reality headsets as an essential step on the path toward the metaverse becoming a truly pervasive technology. 

Some of the higher-ups at Meta seem to believe that the metaverse will succeed the mobile internet and become just as important a part of our lives. Accordingly, it makes sense that the company is willing to bet big on this emerging technology in order to beat potential competitors. Currently, Apple (AAPL) and Alphabet (GOOG) have a dominant role on the mobile internet, which has led to some court battles due to antitrust concerns. These two tech giants can use this position to limit Meta’s mobile business, but if Meta is able to become one of the first companies to take part in building the metaverse, all bets are off. In order to not miss this opportunity, Meta is shifting billions of dollars and thousands of employees to focus on metaverse development. Given the massive resources at Meta’s disposal, it’s not surprising that Morgan Stanley (MS) sees Meta stock as the best bet for investors seeking to gain exposure.

Will NVIDIA Be the Metaverse’s Big Winner?

However, Meta isn’t the only company with its eye on a piece of the pie. NVIDIA (NVDA) has been catching the attention of many traders recently. Since the industry-leading chipmaker’s blockbuster earnings release last week, many might have a positive outlook for the company’s stock price. Just this year, NVIDIA’s share value has more than doubled, as demand for its chips and other technologies grows among those working and gaming from home. 

On the 18th, the day after NVIDIA’s quarterly earnings release, its share price spiked by 8.3%. Over the course of the trading day Wednesday, NVIDIA stock hit a high of $329.71 per share, before coming to rest at $328.06, a nearly 3% rise.

At the company’s earnings call on November 17th, Chief Financial Officer Collette Kress made some important announcements that were sure to interest those wondering about NVIDIA’s plans for the metaverse.

NVIDIA’s new Replicator service represents a huge step forward for developers seeking to create immersive 3D worlds, an essential component of the metaverse. With Replicator, game developers will have the ability to combine real-world and digital data to make gaming environments ever more realistic.

Perhaps NVIDIA’s most promising announcement was that of Omniverse Avatar, which will be used to generate virtual avatars capable of interacting with humans. The platform’s ability to create an avatar able to take a restaurant customer’s order has already been demonstrated.

For those looking to invest in firms involved in metaverse technology, NVIDIA may seem like an exciting opportunity. CEO Jensen Huang explained during the Q&A following last week’s earnings call that the company stands to profit from licensing fees collected from game designers using the Omniverse, in addition to revenues generated from customer service bots dependent on the technology. NVIDIA also plans to use its existing hardware specialisation to reap further benefits from the metaverse, as computer graphics will be necessary for the metaverse’s functioning as well. In short, many analysts are estimating that NVIDIA seems especially poised to become a key player in this developing field.

Mickey Metaverse?

Market watchers may be surprised to hear of another company seeking, like Meta, to create its own metaverse. Walt Disney (DIS) has been taking steps into the fields of augmented and virtual reality for at least the past few years, but the venerable entertainment giant seems to be ready to take bigger strides into futuristic technology. 

On November 10th, Disney CEO Bob Chapek hinted that the company would use technology to create a three-dimensional world filled with classic characters such as Mickey Mouse, Snow White, and Luke Skywalker. Although Chapek’s statements were short on details, this vision for Disney’s next step seemed to tie in with a LinkedIn post by the company’s former Executive Vice President for Digital. This former executive, Tilak Mandadi, described his vision for an online theme park integrating real-world and virtual experiences in his 2020 post.

Disney’s earnings release two weeks ago may have disappointed some investors, but with its massive base of 118.1 million subscribers, the company could stand to become a metaverse pioneer as well.

What New Opportunities Lie Ahead?

The aforementioned technologies may seem like science fiction to many traders, but many advancements we take for granted today were looked at in much the same way in the past. Some analysts are predicting that the metaverse could become a $1 trillion industry. With opportunities of this scale potentially lying ahead, it may behoove savvy investors to pay attention to which companies are poised to be leaders in this emerging field.