We recently published a list of the 7 best gaming stocks to buy right now. In this article, we’ll take a look at how NetEase Inc. (NASDAQ:NTES) stands compared to other best gaming stocks to buy right now.
Game industry overview
The gaming industry not only provides entertainment, but also drives innovation in technology and creativity. The global gaming market is valued at $249.55 billion in 2022. In the future, the market is expected to grow at a compound annual growth rate (CAGR) of 13.1% from 2023 to 2030, reaching $665.77 billion by the end of the forecast period. This expansion is being driven by several key trends that are reshaping the way games are developed and played.
Rising popularity of cloud gaming, introduction of VR and AR technologies, and growing interest in online gaming are some of the key trends driving market growth.
Rising interest in e-sports and online gaming tournaments is expected to increase consumer spending on gaming, contributing to market growth. In esports, teams and individual players compete in a variety of video games. The first-ever Esports World Cup was held in Riyadh, Saudi Arabia from July to August, with over 1,500 players competing and a whopping $60 million in prize money at stake. The event spanned eight weeks and featured 23 competitions across 22 different video games, including Call of Duty and Fortnite. The tournament is part of Saudi Arabia’s Vision 2030 initiative, which aims to diversify the Saudi economy.
The emergence of generative AI
Another important trend is the integration of generative AI into games. This technology allows for the creation of dynamic storylines and realistic characters that can interact with players in a more realistic way. Experts believe this will enhance player engagement as the experience is personalized based on individual actions. The potential for AI to create entire game worlds opens up new avenues of creativity in game design.
According to Bernard Marr, a world-renowned futurist and author of Generative AI in Practice: 100+ Amazing Ways Generative Artificial Intelligence is Changing Business and Society, generative AI is an attractive technology for developers. It is revolutionizing video game development by providing tools to create content. , realistic visuals, and immersive gameplay experience. Ma believes that generative AI can help developers create expansive and unique game environments through procedural generation, enabling dynamic gameplay experiences that change from session to session.
Additionally, this technology can generate music and sound effects that adapt to in-game events and enrich the overall player experience. Generative AI helps developers enhance storytelling and design by automating tasks like creating quests and creating dialogue. Ma believes that although generative AI will not replace human creativity, it can speed up game development and reduce costs, which is a huge step forward for the gaming industry.
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methodology
To create our list of the 7 best gaming stocks to buy right now, we used Finviz and Yahoo’s stock screener to find the largest gaming companies. We also reviewed our own rankings, vetted ETFs, and consulted various online resources. From an initial pool of over 20 gaming stocks, we focused on the top 7 stocks most favored by institutional investors. Data on hedge fund sentiment surrounding each stock was obtained from Insider Monkey’s database of 912 elite hedge funds. The 7 best gaming stocks to buy now, ranked in ascending order by the number of hedge funds that own the stock as of Q2 2024.
Why do we care what hedge funds do? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Two gamers enjoying an immersive experience playing together online via a gaming console.
NetEase Inc. (NASDAQ:NTES)
Number of hedge fund holders: 35 people
NetEase Inc. (NASDAQ:NTES) is a leading Chinese Internet technology company focused on gaming, education, and e-commerce. The company has built a diverse portfolio of popular mobile and PC games catering to both domestic and international markets. Through in-house title development and collaboration with global partners, we have continuously expanded our mobile games portfolio over the years.
The company has been making great strides in the gaming industry with new games released recently. The multiplayer survival game Once Human reached peak concurrent users of over 230,000 shortly after its release and was ranked in the top 5 games on Steam in July. This innovative title combines supernatural elements with engaging gameplay. Immediately after the August update, Once Human topped Steam’s top seller charts in 12 countries and has amassed over 10 million downloads.
In late July, NetEase Inc. (NASDAQ:NTES) launched its highly anticipated battle royale game, Naraka: Bladepoint Mobile. The game offers fast-paced combat and an innovative co-pilot AI system that allows players to team up with AI allies for immersion. experience. The game quickly gained popularity, reaching number 3 on the iOS box office charts shortly after its release, demonstrating its appeal among gamers.
Additionally, the company continues to enhance its flagship titles such as Fantasy Westward Journey, which recently debuted in Q2 with an all-new expansion pack that adds new content and fresh gameplay.
In the second quarter of 2024, NetEase Inc. (NASDAQ:NTES) reported total net revenue of $3.5 billion, an increase of 6% compared to the same quarter in 2023. Revenue from games and related value-added services increased 7%. This was primarily driven by the success of mobile titles such as Identity V and Justice Mobile. Notably, mobile gaming accounts for approximately 76.4% of the total net revenue of the online gaming business, highlighting its important role in the company’s growth.
NetEase Inc. (NASDAQ:NTES) is focused on innovation and community engagement, expanding its presence across genres and markets. Over the past 10 years, the company has achieved a compound annual growth rate (CAGR) of 26% in revenue, and net income has grown at a CAGR of 20% over the same period.
NetEase Inc. (NASDAQ:NTES) is an attractive choice for investors looking to take advantage of the rapidly growing mobile gaming market. Analysts are bullish on NTES. Analysts currently maintain a consensus Buy rating on the stock, and their median one-year price target of $114.38 indicates a potential upside of 14.90% from current levels.
According to Insider Monkey’s database, as of Q2 2024, NetEase Inc. (NASDAQ:NTES) is held by 35 hedge funds.
Overall, NTES ranks #6 among the best gaming stocks to buy right now. While we see the growth potential of NTES as an investment, we believe AI stocks have a better chance of delivering higher returns in a shorter time frame. If you’re looking for AI stocks that are more promising than NTES but are trading at less than 5x earnings, check out our report on the cheapest AI stocks.
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Disclosure: None. This article was originally published on Insider Monkey.
