Amidst the trials and tribulations of securing the latest console generation due to supply constraints and rampant scalping, manufacturers are exploring alternative avenues. The escalating costs associated with semiconductors for processing units threaten to price consoles out of reach for the average consumer. Consequently, the meteoric growth of 5G networks and the proliferation of cloud computing data centers have birthed a new phenomenon – cloud gaming stocks.
While Google’s Stadia platform failed to gain traction in the market, largely due to a lack of exposure, other services are poised for triumph. These services allow users to directly stream high-end games, obviating the need for expensive consoles or PCs. This democratization of the gaming industry promises to attract a broader consumer base, augmenting revenue streams and profit potentials. For discerning investors, these stocks herald an opportunity to partake in the future landscape of the gaming industry. Here are three stocks poised to redefine gaming as we know it.
Microsoft (MSFT)
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At the pinnacle of cloud gaming offerings, Microsoft‘s (NASDAQ:MSFT) Xbox Cloud service continues to refine its functionality each passing year. Following its acquisition of Activision, the company witnessed a staggering 61% surge in revenue within its Xbox business unit. Boasting an extensive library of games, Microsoft’s investments in cloud gaming infrastructure are reaping dividends.
Microsoft’s substantial investments in cloud computing infrastructure and services have positioned it to capitalize on the burgeoning industry. Primarily through Microsoft Azure, the company harnesses powerful computing centers to deliver gamers with unrivaled graphics and performance. By broadening its consumer base via cloud gaming services, Microsoft stands on the cusp of gaming industry dominance.
Aspiring investors eyeing the gaming frontier should monitor Microsoft’s foray into cloud gaming ventures. Success and widespread adoption could spell the end of costly console rivalries, propelling MSFT to the forefront of cloud gaming stocks.
Sony Group (SONY)
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Distinguished for its cinematic exclusives and cutting-edge technological specifications, Sony Group’s (NYSE:SONY) Playstation range has garnered unparalleled sales triumphs. Surpassing Microsoft’s Xbox platforms by 27.43 million units over the last 40 months, the formidable PlayStation user base is a force to reckon with. Despite its dominance in the console arena, Sony recognizes the potential of cloud gaming and has unveiled a game streaming service through Playstation Plus.
With a notable $13 million uptick in sales within its game division, Sony’s strategic pivot towards cloud gaming is a logical move. The exorbitant costs and erratic availability of its consoles have rendered Sony susceptible to losing U.S. gaming market share. By enabling users to access its games through a streaming service, Sony aims to potentially eclipse PlayStation console sales in the near future.
Leveraging its global console supremacy, Sony stands on the precipice of cloud gaming conquest. Astute investors mulling over cloud gaming stocks would be remiss to overlook Sony as the industry’s horizons broaden.
Nvidia (NVDA)
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Irrespective of which gaming titan emerges triumphant in the cloud gaming realm, Nvidia (NASDAQ:NVDA) remains an unequivocal winner. As the foremost purveyor of personal computer graphics processing units (GPUs) and data center GPUs, Nvidia is primed for enduring prosperity. The company’s dominion over the technology indispensable for game streaming and hosting reinforces its unrivaled market position.
While Nvidia is a stalwart in cloud hardware for both streaming and hosting, it is also a key competitor in the cloud gaming arena. GeForce NOW, the company’s flagship cloud gaming initiative, empowers users to stream their owned PC games across various devices. Powered by Nvidia’s potent GTX and RTX GPUs, the service delivers top-tier performance for seamless high-performance streaming.
This cost-efficient gaming paradigm endows enthusiasts with the joy of PC gaming sans the exorbitant expenses associated with high-end rigs. Of all the cloud gaming stocks vying for attention, NVDA emerges as a frontrunner owing to the resounding popularity of PC gaming vis-a-vis consoles.
On the date of publication, Viktor Zarev did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
