Video Game Market Poised for Metaverse and Gen AI Growth
The rise of generative artificial intelligence (gen AI) and the metaverse (virtual and augmented reality) has set the stage for unprecedented growth in the video game market. As these immersive experiences become more profound, video game stocks like EA and NTDOY are poised to capitalize on this momentum.
The Apple Factor
With Apple’s (NASDAQ:AAPL) highly anticipated spatial computer (Vision Pro) set for an early February launch, the gaming landscape is on the brink of a transformative shift. While not a gaming device in itself, Vision Pro is expected to pave the way for a robust ecosystem of profound games and experiences. This technological leap is likely to propel spatial computers from a niche gadget for enthusiasts to a mainstream consumer must-have.
Moreover, the underlying economics of virtual reality game development are set to improve significantly with the emergence of game-changing products like Vision Pro, making the saturation of virtual reality hardware a more feasible prospect. As these headsets become more commonplace, gaming companies are primed to reap the rewards of the Metaverse boom, even in the absence of prominent virtual reality projects currently in the pipeline. Additionally, the rise of gen AI is expected to drive down development costs, potentially becoming a massive catalyst for video game stocks in the next decade.
EA: Heading for Virtual Reality Ascendancy
Electronic Arts is a powerhouse behind popular sports titles and non-sports games like Star Wars Jedi: Survivor. Despite its lukewarm reception in the industry, EA’s foothold in the burgeoning gaming market makes it a compelling investment. With a relatively attractive valuation and the highly anticipated launch of Plants vs. Zombies 3, EA is well-positioned for success. The incorporation of virtual reality support for its titles signifies EA’s strategic pivot towards the realm of spatial computing, a move with the potential to revolutionize the gaming experience.
Analysts’ Sentiment on EA Stock
Analysts have bestowed EA stock with a Moderate Buy rating, comprising 12 Buys and seven Holds in the past three months. The average price target of $147.32 implies a 7% upside potential for investors.
NTDOY: The Nintendo Factor
Nintendo, a stalwart in the video game industry, is diligently working on its next-generation console, the Switch 2. The imminent release of this long-awaited console has the potential to bolster Nintendo’s position in the market. Despite facing stiff competition in the hardware arena, Nintendo’s rich content library and unwavering relevance in the gaming sphere make it a formidable player capable of thriving in an expanding market.
Analysts’ Sentiment on NTDOY Stock
NTDOY stock has garnered a Moderate Buy rating based on two Buys and one Hold in the past three months, although no price target has been assigned.
The Verdict
The video game market is poised for substantial growth, fueled by emergent technologies such as virtual reality and gen AI. Both EA and Nintendo offer unique opportunities to tap into the burgeoning gaming development landscape, but with the impending release of the Switch 2, Nintendo emerges as a compelling choice. The launch of this highly anticipated console could serve as a pivotal catalyst for Nintendo’s stock, making it an attractive bet in the video game stock arena.
