Back to top

Image: Bigstock

4 Stocks to Make the Most of Surging Demand for Cloud Gaming

Read MoreHide Full Article

Per a report by Newzoo, cloud gaming generated revenues of $633 million in 2020 and the number of cloud gamers is expected to be 23.7 million by the end of 2021, thereby highlighting its growing demand. But why is cloud gaming garnering such popularity? Well, the answer lies in the fact that it offers gamers the chance to play graphics-intensive titles without having to possess relevant hardware suitable for such games.

Gamers only require a fast Internet connection since the games are available on the cloud and can be streamed on devices like smartphones, personal computers, or laptops without requiring any download. In fact, cloud gaming allows gamers to play titles that they might own on a gaming console on other devices. Gamers can also use their gaming console controllers to play certain cloud games, thereby taking the gaming experience closer to the original.

The rising availability of the Internet across the world is boosting the adoption of cloud gaming and the rollout of 5G technology is sure to aid it further. This is because while gaming, a lag in response time can have an impact on the overall gaming experience, especially when it comes to multiplayer games, where a delay in response can lead to a player losing the match. 5G stands to solve this problem as it offers higher data transfer speeds and lower latency in comparison to its 4G counterpart, which can make the experience more seamless for gamers.

Reflective of the conveniences that cloud gaming is offering, it is only expected that the cloud gaming market will grow going forward. Per a report by Mordor Intelligence, the global cloud gaming market is expected to witness a CAGR of 45.2% from 2021 to 2026. The report further stated the rising adoption of smartphones is set to drive the growth of the cloud gaming market. Factors like the “release of 5G and the emergence of unlimited data plans” should aid cloud gaming as most players now “prefer playing games on their mobile devices,” per the report.

4 Stocks to Keep an Eye On

The adoption of cloud gaming seems poised to grow in the future owing to the conveniences it offers to gamers like the ability to play on smartphones and laptops without having to purchase expensive gaming hardware. This seems then a good time to look at companies that stand to benefit from this rising popularity of cloud gaming. We have selected four such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft Corporation (MSFT - Free Report) offers Xbox Cloud Gaming and in June, it announced that the service will be available to all Xbox Game Pass Ultimate members with Windows 10 personal computers and iOS devices, via web browsers, across 22 countries. Microsoft added that its cloud gaming is now being powered by custom Xbox Series X hardware, thereby improving the overall gaming experience.

Shares of Microsoft have risen 28.1% year to date and the company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 3.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 7.9%.

NVIDIA Corporation (NVDA - Free Report) stands to benefit from the rapid adoption of cloud gaming as it offers its own cloud gaming service, namely, GeForce NOW. On Jul 15, the company announced that the total number of titles available has reached 1,000, including nearly 100 free-to-play titles.

Shares of NVIDIA have gained 49.4% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 58.8%.

Facebook, Inc. (FB - Free Report) offers cloud gaming on its platform, and on Jul 1, the company announced coverage to more than 98% of the people in mainland United States. Facebook further stated that Assassin’s Creed Rebellion by Ubisoft was launched as a cloud game on Facebook Gaming. On Jul 23, Facebook announced the availability of cloud games on iOS devices via a web app.

Shares of Facebook have gained 30.4% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased nearly 4% over the past 60 days. The company’s expected earnings growth rate for the current year is 37.8%.

Alphabet Inc.’s (GOOGL - Free Report) Google offers its cloud gaming platform, namely, Stadia. From Jun 23, Stadia has been made available on Chromecast with Google TV and on compatible Android TV OS devices.

Shares of Alphabet have gained 53.7% year to date and it currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 10.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 68.2%.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Microsoft Corporation (MSFT) - free report >>

NVIDIA Corporation (NVDA) - free report >>

Facebook, Inc. (FB) - free report >>

Alphabet Inc. (GOOGL) - free report >>

Published in