The metaverse market is growing rapidly and is tipped to be the next big thing in the evolution of the internet. An increasing focus on converging the digital and physical worlds is driving companies from chipmakers to gaming to jump on the metaverse bandwagon. Tech giants have already been making massive investments to fuel their transition to the metaverse.
In addition, immersive metaverse technologies, such as augmented reality and virtual reality, non-fungible tokens (NFTs), and blockchain, have gained traction globally over the past few years. According to a Fortune Business Insight report, the metaverse market size is expected to reach $1.53 trillion by 2029, growing at a 47.6% CAGR.
Given this backdrop, we think popular metaverse stocks QUALCOMM Incorporated (QCOM), Autodesk, Inc. (ADSK), and Microsoft Corporation (MSFT) could be ideal investments bets now.
QUALCOMM Incorporated (QCOM)
QCOM in San Diego, Calif., specializes in foundational technologies for the wireless industry. The company operates through three segments: Qualcomm CDMA Technologies; Qualcomm Technology Licensing; and Qualcomm Strategic Initiatives.
On April 4, QCOM acquired Arriver. The acquisition should enhance and accelerate QCOM Technologies’ ADAS offerings.
On March 9, the company increased its quarterly cash dividend by 10% to $0.75 per share, paid on March 24, 2022.
QCOM’s revenue increased 30% year-over-year to $10.71 billion in its fiscal first quarter (ended Dec. 26, 2021). Its non-GAAP net income grew 48% from its year-ago value to $4.31 billion, while its operating income rose 53% year-over-year to $3.86 billion over the period. The company’s non-GAAP EPS increased 49% from its year-ago value to $3.23.
The $2.92 consensus EPS estimate for its fiscal second quarter (ended March 31, 2022) represents a 53.6% improvement year-over-year. The $10.60 billion consensus revenue estimate for its about-to-be-reported quarter indicates a 33.8% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 8.3% in price to close yesterday’s trading session at $135.36.
QCOM’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Value, Growth, Sentiment, and Quality. Among the 96 stocks in the A-rated Semiconductor & Wireless Chip industry, it is ranked #3. Click here to see the additional POWR ratings of QCOM for Momentum and Stability.
Click here to checkout our Semiconductor Industry Report for 2022
Autodesk, Inc. (ADSK)
ADSK in San Rafael, Calif., provides software and services for 3D design, engineering, and entertainment. It offers AutoCAD Civil 3D, Autodesk Build, BIM 360, AutoCAD, AutoCAD LT, computer-aided manufacturing (CAM) Solutions, Fusion 360, Inventor tools, Vault, Maya, and 3ds Max, among others. The company’s offerings are delivered to customers in architecture, engineering, construction, product design and manufacturing, and the digital media and entertainment industries.
On March 29, ADSK launched Bridge, a new collaboration capacity for more controlled and flexible construction collaboration. Bridge reduces manual work and thereby saves time and money.
On March 24, ADSK agreed to acquire The Wild for an immersive and collaborative workspace. With the acquisition, ADSK should be able to meet the increasing need for augmented AR and VR technology advancements.
During its fiscal year 2022 fourth quarter (ended Jan. 31, 2022), ADSK’s net revenue increased 17% year-over-year to $1.21 billion. Its gross profit rose 15.8% from its year-ago value to $1.10 billion. Its non-GAAP income from operations grew 34% from the same period last year to $421.6 million, while its non-GAAP net income per share was $1.50, representing a 27.1% increase year-over-year.
Analysts expect ADSK’s revenues to increase 16.4% year-over-year to $1.15 billion in its fiscal first quarter (ending April 2022). Its EPS is expected to increase 29.8% to $1.34 in the current quarter. It is no surprise that the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained marginally over the past month to close the last trading session at $199.03.
ADSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. ADSK also has an A grade for Quality. The stock is ranked #29 of 158 stocks in the Software - Application industry.
Click here to see ADSK’s Growth, Value, Momentum, Stability, and Sentiment grades.
Click here to check out our Software Industry Report for 2022
Microsoft Corporation (MSFT)
Microsoft in Redmond, Wash., is a leading tech company that develops and supports a range of software products, services, devices, and solutions. It operates through three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing. Its offerings range from Skype, Microsoft Teams, Office 365 Security and Compliance for Business to Xbox hardware, video games, Xbox content, and services in gaming.
On April 6, MSFT partnered with the Boeing Company (BA) to accelerate digital aviation. The collaboration should enable BA to leverage MSFT’s cloud and AI capabilities to optimize operations and fuel innovations in digital aviation.
On March 4, MSFT acquired Nuance Communications Inc. (NUAN). Analysts expect this strategic acquisition should accelerate industry-specific cloud strategy to transform the future of work and care.
In its second fiscal quarter, ended Dec. 31, 2021, MSFT’s revenue increased 20% year-over-year to $51.73 billion. Its operating income increased 24% from its year-ago value to $22.25 billion, while its net income grew 21% year-over-year to $18.77 billion. The company’s EPS came in at $2.48, representing a 22% year-over-year improvement.
Analysts expect MSFT’s revenues to increase 17.6% year-over-year to $49.05 billion in its fiscal third quarter (ended March 31, 2022). Its EPS is expected to increase 12.5% to $2.19 in the to-be-reported quarter. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of MSFT have gained 11.5% in price over the past year.
The company has an overall B rating of B, which translates to Buy in our proprietary rating system. It is no surprise that MSFT has an A grade for Sentiment and a B grade for Stability and Quality. In the Software - Business industry, it is ranked #9 of 61 stocks.
Beyond what we have stated above, we have also given MSFT grades for Growth, Value, and Momentum. Get all the MSFT ratings here.
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Click here to check out our Software Industry Report for 2022
QCOM shares were trading at $138.55 per share on Tuesday morning, up $3.19 (+2.36%). Year-to-date, QCOM has declined -23.89%, versus a -6.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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