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Gaming, once a quiet player in the entertainment realm, now stands tall as a colossal, ever-expanding force. The behemoth that is Grand Theft Auto V, boasting an impressive 175 million global copies sold, epitomizes the massive financial prowess nestled within the gaming universe. This sector exhibits unparalleled potential for investors seeking substantial returns.
The gaming industry is a thriving global spectacle, buoyed by the surge of mobile gaming and advancements in console technology. The impending rollout of 5G networks promises to turbocharge this momentum by eradicating historical barriers like low bandwidth and high latency that previously hindered mobile gaming. With this landscape in mind, we unveil three compelling video game stocks for investors to consider.
The Dominant Force: Microsoft (MSFT)
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Microsoft (NASDAQ: MSFT) is a powerhouse that consistently dominates the charts across various tech sectors, gaming being no exception. Its expansive strategy, focusing on inclusivity, cross-platform play, and subscription services like Xbox Game Pass, has propelled it to the forefront. Recent bold moves, including the acquisition of gaming giant Activision Blizzard (NASDAQ: ATVI), catapulted Microsoft to the esteemed position of the world’s third-largest gaming entity.
Microsoft’s foray into gaming has yielded bountiful rewards, with its gaming revenue leaping from $9.05 billion to $15.46 billion between 2017 and 2023. This remarkable surge of over 70% underscores the robust expansion of its gaming arm and the sector at large. As Microsoft continues to invest in AI and other ancillary technologies, its gaming division stands poised as an unwavering force in the industry.
The Evergreen Contender: Electronic Arts (EA)
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Electronic Arts (NASDAQ: EA) boasts a resilient presence in the gaming landscape, flaunting a repertoire of blockbuster franchises such as FIFA, Madden NFL, and Apex Legends. Over the years, EA adeptly navigated market shifts, securing a substantial share of the global gaming market.
The diversified game portfolio of EA has bolstered its financial performance, showcasing robust growth across revenue and profitability metrics. Its agile response to emerging trends, like the battle royale craze with Apex Legends, underscores its adaptability and expansion into new gaming segments. Furthermore, EA’s embrace of digital distribution has amped up profit margins through direct-to-consumer sales. With stellar profitability metrics and a commendable free cash flow margin that dwarfs the sector median, EA’s track record of acing the gaming landscape hints at a luminous future.
The Metaverse Marvel: Roblox (RBLX)
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Roblox (NYSE: RBLX) stands as a trailblazer in the metaverse gaming realm, blending diverse gaming experiences with a lively social community. The platform’s meteoric rise stems from empowering users with unique tools to craft bespoke worlds while offering real-world value through in-game currency.
The pandemic era elevated Roblox’s financials to unprecedented heights, yet navigating the post-pandemic terrain posed challenges. Nonetheless, recent results signal a robust resurgence, with six consecutive quarters of double-digit year-over-year growth and stellar analyst performance. Following a strong Q4, Roblox anticipates an annual sales growth of at least 20% through 2027. With an optimistic outlook and compelling operational results, Tiprank’s analysts foresee a remarkable 32% upside from current levels.
On the date of publication, Muslim Farooque had no positions in the securities discussed. The opinions articulated in this article are solely those of the author, complying with the InvestorPlace.com Publishing Guidelines.
Muslim Farooque, an avid investor and eternal optimist, is deeply entrenched in gaming and technology spheres. With a bachelor’s degree in applied accounting from Oxford Brookes University, he brings a unique perspective to the table.
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