2 best gaming actions to watch in November
The great recession of 2008-2009 is now a distant memory, almost forgotten for most investors, while those new to investing have only benefited from a massive bull market (if you ignore the temporary drop in the last year at the start of the pandemic).
Growth stocks have been their own force of nature on Wall Street, as the Federal Reserve’s easy money policies, low lending rates, and government spending programs created an opportunity for businesses to grow. organically through innovation as well as acquisition. There is no indication that anything will change in the near future.
The actions of games played an important role in this. Over the past decade, people like Activision, Electronic arts, and Take-Two Interactive have largely surpassed the S&P 500.
Yet video games have changed dramatically during this period, as games have moved online and into digital formats, and the industry has been gamified with the growth of esports.
As the general market index continues to hit new highs, there are new opportunities for profit. The following two gaming actions are set to set the tone for future wins.
Manufacturer of gaming equipment and accessories Corsair game (NASDAQ: CRSR) has been on a roller coaster ride for the past two years. But with its stock down 27% this year and nearly 50% below its 52 week high, it is ready to go.
Corsair manufactures high-end, high-performance headsets, keyboards, mice, controllers and equipment for live gamers and content creators. While the pandemic has actually benefited Corsair, with people being forced to stay home and turn to video games for entertainment, the current supply chain disruption has hurt its business.
Revenue fell 14% in the third quarter, but Wall Street expects Corsair to generate nearly $ 1.9 billion for the full year, which is expected to exceed $ 3 billion. dollars by 2025.
Data from Juniper Research suggests that global esports revenue is expected to reach $ 1.1 billion this year and could reach $ 3.5 billion by the middle of the decade, while the gameplay audience in direct could attract over a billion viewers worldwide.
Corsair’s inventory of green screens, ambient lighting, sound deadening panels and its Cam Link Pro PCIe capture card and video mixer gives content creators all the high-quality tools they need, and the company is preparing for the future of the industry.
With less than 1.5 times the sales, 15 times next year’s profits, and less than 20 times the free cash flow it generates, Corsair Gaming could be set up for future earnings.
Even if Nvidia (NASDAQ: NVDA) takes advantage of the tremendous expansion underway in artificial intelligence, data centers and automobiles using its computer chips to drive new sales and market share gains – data centers set to become Nvidia’s largest segment by 2025 – the games remain its bread and butter.
Arguably best known for its graphics cards that make processing-intensive video games possible, Nvidia’s gaming segment has generated $ 10.5 billion in revenue in the past four quarters, or 48% of the business. of the company.
Graphics processing units (GPUs) for games generated 47% of total revenue for the second quarter of the fiscal year, and Mordor Intelligence reports that the gaming GPU market, in which NVIDIA has an 83% market share, is expected to grow at an annual compound rate of 14% until 2026.
With the growing adoption of cloud-based games, Nvidia is also seeing growth with its cloud gaming service GeForce Now, which presents a particularly attractive catalyst for further growth.
Nvidia uses the Deep Learning Super Sampling (DLSS) technology it developed to make games even better and more immersive. DLSS takes low resolution images and scales them to high resolutions for display on high resolution screens through the application of AI.
Wall Street predicts the chipmaker will increase revenue from $ 16.5 billion in 2021 to $ 51 billion in 2026, a compound annual growth rate of over 25%. Profits are expected to grow even faster, over 26% per year to $ 7.73 per share.
It is true that Nvidia does not come cheap, but as a dominant leader in its core market and expanding into new verticals with spectacular growth opportunities in new revenues and profits, it will become the premium it presents. and its stock will increase accordingly.
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