Video games are one of the most reliable growth areas of tech, with companies enjoying consistent gains from steady demand for new content and hardware upgrades.
Data from Statista shows the video games market is projected to hit revenue of $250 billion this year and expand at a compound annual growth rate of 10% through 2027. As a result, it’s not surprising that many of the biggest names in tech have varying stakes in the industry, presenting an exciting investment opportunity.
Investing in a games company can be an excellent way to add stability to your portfolio over the long term. The games market has hit a bit of a slump over the last year as macroeconomic headwinds have curbed consumer spending. However, economic hurdles won’t last forever, with the industry likely to offer substantial growth to patient stockholders.
Here are three top gaming stocks to buy in November.
1. Nvidia
All eyes have been on Nvidia (NVDA 0.88%) in 2023 as it has climbed to the top of the artificial intelligence (AI) market. Its chips have become the preferred hardware for developers building AI models, sending the company’s revenue soaring as its graphics processing units (GPUs) have flown off the shelves.
However, before it snapped up market share in AI, Nvidia spent years dominating the PC gaming industry. Its powerful chips are popular among gamers, able to run demanding titles at settings far higher than what is possible on consoles.
Nvidia’s success in video games saw it attain an 87% market share in desktop GPUs, outperforming rivals Advanced Micro Devices and Intel. The tech giant’s dominance paved the way for it to expand into AI and cloud computing, with its market cap soaring above $1 trillion this year.
In addition to a solid position in PC gaming, Nvidia is the exclusive chip supplier to the Nintendo Switch — the third-best-selling console of all time. The partnership has put Nvidia’s chips into mainstream use, with over 132 million units sold.
As a leading chipmaker, Nvidia allows investors to profit from the growth of multiple markets. It’s a powerful company with a solid long-term outlook, making its stock an attractive buy this month.
2. Apple
Apple (AAPL -0.99%) has quietly claimed a spot in the top five most valuable game companies thanks to the success of its App Store. Mobile games account for over 60% of spending on the digital marketplace, with Candy Crush Saga earning $660 million in the U.S. alone in 2022.
The tech company has carved out a lucrative position as the middle-man between app developers and consumers. Apple charges a 30% fee for apps and in-app purchases across all its devices. So, as the iPhone has soared in popularity, achieving a 55% market share in smartphones in Q2 2023, so have earnings from the App Store.
Apple’s services segment, which includes income from the App Store, has quickly become the second-highest-earning part of its business and has shown no signs of slowing. Services hit revenue growth of 16% in the fourth quarter of 2023 and 9% for the fiscal year. The company is massively profiting from the video games market, making its stock a great option for anyone looking to invest in the quickly growing sector.
3. Microsoft
With its popular Xbox brand, Microsoft (MSFT -0.69%) is easily among the world’s top three most prominent game companies, alongside the likes of Sony and Nintendo. However, it has distinguished itself from the competition this year by becoming the most exciting investment option in the industry after acquiring game developer Activision Blizzard for $69 billion.
The purchase was first announced in January 2022 but only completed this October after being held up by antitrust concerns as regulators worldwide scrutinized the deal. However, now that the purchase is final, the real work can begin. Activision is home to an immensely valuable library of games that includes one of the most profitable franchises in history: Call of Duty. Alongside popular brands such as World of Warcraft, Overwatch, and Candy Crush, Microsoft could have the tools to eventually win the console wars.
Microsoft and Sony have been in steep competition in the console market for years. Microsoft’s approach to attracting consumers has been to offer the most value, launching Xbox Game Pass in 2017. The subscription-based platform has often been described as a “Netflix for games” and gives access to an extensive library of games for a low monthly fee rather than making gamers pay for titles individually.
The platform’s biggest selling point is that it makes new games available on release day at no extra cost to members. The addition of Activision’s Call of Duty and other franchises could make it a no-brainer for shoppers to choose an Xbox over Sony’s PlayStation in the coming years.
Microsoft has massive earnings potential in video games with its recent acquisition and potent Xbox brand. Alongside exciting ventures in AI and the cloud market, its stock is a no-brainer this November.
Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, Netflix, and Nvidia. The Motley Fool recommends Intel and Nintendo and recommends the following options: long January 2023 $57.50 calls on Intel and long January 2025 $45 calls on Intel. The Motley Fool has a disclosure policy.
