3 Video Game Stocks You Can Buy And Hold For The Next Decade
The video game industry is on track to garner nearly $ 176 billion in sales this year, and it is expected to exceed $ 200 billion in total sales by 2023. But this business is far different from what it is. she was. Games and gaming platforms are becoming the new social networks for young people. AmazonTwitch’s popular live game streaming platform just broke audience records for its third consecutive quarter. All of this represents an opportunity for investors.
There are other ways to invest in this industry than buying the companies that produce the games themselves. With that in mind, here’s why Nvidia (NASDAQ: NVDA), Corsair game (NASDAQ: CRSR), and Electronic arts (NASDAQ: EA) are expected to generate solid returns for their shareholders over the next decade.
Nvidia has had huge success in expanding the market from its core graphics processing technology to non-gaming applications, such as data centers and cryptocurrency mining. However, the gaming market remains the largest, accounting for 48% of total revenue over the last four quarters.
In the second quarter, Nvidia’s share of the discrete graphics card market edged up to 80%, where it led the expansion card market for the past 15 years. Its gaming segment saw robust revenue growth of 85% year-over-year, driven by growing demand for gaming laptops. These results show that gamers continue to upgrade their graphics cards. to keep their PCs up to date to manage the latest titles. And more and more versions are supporting Nvidia’s RTX ray tracing technology, which bodes well for further upgrades in the coming years.
While graphics card sales may fluctuate in cycles, continued advancements in graphics technology are expected to drive growth in Nvidia’s gaming segment over time. Specifically, Nvidia is expected to continue to benefit from the growing popularity of competitive online games, aka esports. It is also a leader in cloud gaming with its GeForce NOW service. Since the company will also benefit from non-gaming favorable winds, such as the growth of the data center market, Nvidia is a great tech stock to own in the long run.
2. Privateer game
Corsair Gaming is a leading manufacturer of gaming peripherals. It also sells system components that gamers can use to build or upgrade their gaming PCs, including power supplies and memory chips. The high demand for graphics cards often spills over to these types of components, which has resulted in explosive growth for Corsair in recent years. For 2021, Corsair is on track to hit around $ 2 billion in revenue, which would be nearly double its 2019 sales.
The gaming hardware market is estimated at $ 36 billion, so there is plenty of room for Corsair to grow, especially as it expands into new product categories. In addition to selling gaming headsets, mice, and keyboards, it has recently seen strong demand for streaming products such as cameras. An estimated 728 million people around the world spend some of their free time watching other people play video games online. This encourages more gamers to start streaming as well, which contributed to a 41% year-over-year sales increase for Corsair’s gamer and creator peripherals segment in the last quarter.
The company’s main competitor in the United States is Logitech International, but Corsair is focusing on the high-end segment of the market, giving both companies leeway. Additionally, Corsair is trading at a compelling valuation of 14.9 times 2021 earnings estimates. Given the age-old trends that are propelling growing demand for gaming peripherals, Corsair’s stock is a steal at these levels.
3. Electronic arts
EA is a leading producer of video games across all platforms. In addition to popular titles like Battlefield, Apex Legends, and The sims, the annual releases of the EA Sports label (Madden and FIFA) provide it with constant free cash flow. Last year EA launched its first quarterly dividend, and prospects for further expansion within its sports portfolio should lead to more rewards for shareholders.
Earlier this year, EA announced a long-term initiative to expand its sports lineup with six new mobile experiences, and plans to launch FIFA Online 4 in more countries following its recent successes in Asia. EA is also bringing back its college football franchise.
In November, the last opus of EA Battlefield series, Battlefield 2042 will debut on the new Xbox and PlayStation consoles, which should be a catalyst for growth in the near term. Longer term, management’s strategy to expand the audience for its EA Sports titles to 500 million over the next five years could generate big returns for investors.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.