The metaverse has caught the attention of both users and investors, and for good reason. Fortune Business Insights projects a 48% compound annual growth rate for the metaverse through 2029.
In addition, companies from various sectors such as semiconductors, software, and social media will flourish in this virtual world. metaverse strain meta platform (meta 1.04%), Qualcomm (Qucom 0.19%)When alphabet (goog -0.96%) (Google -0.98%) It stands out by offering both potential and financial security in an uncertain market.
Nothing embraces the metaverse more than renaming yourself to meta. To this end, the company formerly known as Facebook wants to continue its pattern of significant revenue growth in the metaverse.
Some changes were required. Meta claims to have 3.7 billion monthly active users — what he calls his family’s daily active people — on platforms that include Facebook, Messenger, Instagram, and WhatsApp. According to that measurement, Meta’s platform contains almost half of his 7.9 billion population in the world. With a footprint that already covers much of the world, Meta decided to leverage its social media dominance in the Metaverse to pursue growth.
According to IDC, the company acquired Oculus to become the No. 1 producer of virtual reality headsets. This will likely make Meta an integral part of the Metaverse experience. We have also invested heavily in Reality Labs to create unique metaverse experiences.
Still, those investments weigh heavily on the company at a time when advertising spending is slowing. In his first two quarters of 2022, $57 billion in revenue increased by just 3% compared to the same time frame in 2021. This is significant given that revenue growth in 2021 was 37%. Free cash flow so far this year is $13 billion, trailing free cash flow of $16 billion at the same time last year.
The slowdown has caused the stock to fall by almost 60% last year, prompting some to question whether it was a stock market crash. Value play or value trapNonetheless, the move pushed the P/E up to 12.5, making it the lowest earnings multiple among the FAANGs. stock.
Additionally, Meta’s $40 billion in liquidity keeps the company on a solid footing. This cash position and its valuation should limit the downside as it aims to bring the brand back to life in the Metaverse.
Consumers and investors probably know Qualcomm best for its smartphone chipsets and its role in the 5G upgrade cycle. But despite this strength, Qualcomm is diversifying away from smartphones, and several key partnerships with Meta Platforms are driving this strategy.
Qualcomm provides the chip that powers Meta’s Oculus VR headset. The two companies took this relationship a step further when they signed a multi-year deal to deliver premium Metaverse experiences via Qualcomm’s Snapdragon chip and Meta Quest platform.
The company also allocated $100 million to the Snapdragon Metaverse fund, which works with developers and companies to advance immersive augmented, virtual and mixed reality experiences. The potential benefits of such a fund are unclear, but the move will likely help him expand Qualcomm’s metaverse presence.
Amid these changes, Qualcomm continues to grow with revenue of $33 billion in the first nine months of fiscal year 2022. This is a 35% increase compared to the same period last year.
Qualcomm shares fell as the company predicted slower earnings next year.However, despite its recent decline, its stock performance has been nearly S&P 500 Returns for the last 12 months. His P/E ratio of that 11 is much lower than all major chip companies. inteltrades at 7x returns.
However, with the 5G upgrade cycle and potential metaverse, Qualcomm is achieving much faster revenue growth than Intel, which is arguably a factor that justifies a slightly higher valuation. As Qualcomm ventures deeper into the metaverse, the company could get a long-awaited boost.
The Metaverse is just the latest manifestation of Google’s parent company’s mission to organize information while organizing accessible and applicable information.
The Metaverse serves as an extension of this mission. We started innovating early through our augmented reality glasses, Google Glass. Google Glass failed to take off, but the company is working with AR through his Google Lens and its AR developer platform. He also develops his VR products for YouTube and Google Earth.
Given Alphabet’s $125 billion in cash, it can compete aggressively in this industry regardless of the current market. Such an advantage bodes well as the market has become more uncertain.
In the first half of this year, Alphabet generated $138 billion in revenue in this environment, up 17% from the same period last year. This includes 39% growth in Google Cloud, which accounts for his $12 billion in revenue.
Also, its 20 P/E ratio is a relative bargain compared to other megatech stocks apple 25.5 times your earnings, or unity software, may not be profitable in the near future. Such a financial situation bodes well given the potential Alphabet brings to the metaverse and many other areas of technology.
Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. Her Alphabet executive, Suzanne Frey, is a member of The Motley Fool’s board of directors. Will Healy I have a position at Qualcomm. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Apple, Intel, Meta Platforms, Qualcomm, and Unity Software. The Motley Fool recommends the following options: Intel’s March 2023 $120 long call, January 2023 short $57.50 put, and Apple’s March 2023 $130 short call. The Motley Fool has Disclosure policy.