3 Top Gaming Stocks to Buy in January

During the 2008 recession, the gaming industry was often said to be the bright spot in the economy, even as recession-proof as companies like it. Nintendo (NTDOY -1.04%) It went on to sell millions of consoles and games. But the introduction of microtransactions and massive price hikes have changed the gaming industry so much that some analysts aren’t confident it will weather the recession the same way it did in 2008.

However, even a $60 game can be played for hundreds of hours and can be months of entertainment. Free-to-play games, on the other hand, are a bargain for consumers and can be very lucrative for businesses that make use of advertising and in-game purchases.

With a recession looming in 2023, now may be the perfect time to add gaming stocks to your portfolio. Nintendo, NVIDIA (NVDA 0.07%)When microsoft (MSFT -0.49%) An excellent option worth considering in January.

Nintendo

The new year marks Nintendo’s 134th anniversary, and its stock is down 10% year-to-date. Given its biggest competitor, the gradual decline in its share price is impressive. Sony and Microsoft stocks fell 39% and 28%, respectively, over the same period.

Home to some of the world’s biggest franchises such as Super Mario, Pokémon and Zelda, and as the best-selling console, Nintendo’s dominant position in gaming makes it an excellent choice for stock.

Nintendo reported a 19.2% year-on-year decline in hardware sales in the first half of fiscal 2022, mainly due to shortages of semiconductors and other components. Despite declining hardware numbers, the company’s revenue rose 5.2% to ¥656.9 billion ($4.4 billion) in the six months ended Sept. 30. On the other hand, operating profit increased by 0.5% to ¥220.3 billion ($1.5 billion) and ordinary profit increased by 36.4% to ¥322.4 billion ($2.1 billion).

Additionally, the company’s Nintendo Switch console has sold 114.3 million units since its first release in 2017, with the Sony Playstation 2 in 2000, Nintendo’s DS and Game Boy from 1989 to 2004, and the PlayStation 4, making it the fifth best-selling console of all time. Switch has been an incredible success for Nintendo, with a possible sequel coming out in 2023, and an attractive purchase of shares in the company this January.

Since 2017, Nintendo has released a Switch console variant every two years, with a lite version in 2019 and an OLED Switch in 2021. The redesigned sequel for 2023 will boost sales significantly as Switch owners consider upgrading their current consoles. With the launch of multiple highly anticipated game releases such as: zelda installments and super mario bros movie January of the new year is a great time to invest in Nintendo.

NVIDIA

Nvidia’s stock has plunged 51% since January as investors run for the hills as the graphics card (GPU) market plummets. According to Jon Peddie Research, GPU sales have plunged to his lowest level in 20 years, and his 72% market share, Nvidia’s majority, has not reassured Wall Street.

But Nvidia’s stock has continued to climb 170% over the past five years, and other parts of its business show promising prospects. The company exclusively powers the Nintendo Switch with a system-on-chip that provides the console’s graphics and processing. The redesigned device will boost Nvidia’s revenue significantly as Switch console sales rise in 2023.

Additionally, while Nvidia is best known for its contributions to GPU-powered PCs in gaming, it’s also home to a booming data center business. In the third quarter of 2022, data centers accounted for the largest portion of his Nvidia’s revenue. The division’s revenue was his $3.8 billion, up 30.5% year-over-year and accounting for his 64.6% of revenue for the quarter.

The GPU market won’t go down forever and may improve as the economy progresses. Once that happens, Nvidia will have a strong position in gaming consoles and a thriving data center business.

microsoft

Japanese companies have long dominated the gaming industry, with companies like Sony and Nintendo selling hundreds of millions of consoles since the 1980s. However, Microsoft is the first Western company to truly establish itself as a competitor to the Xbox brand.

Things were tough when Xbox first launched in 2002, but the Microsoft subsidiary has become the fourth largest gaming company by revenue and is set to become the third largest by 2023.

In 2017, Microsoft launched Xbox Game Pass, a subscription service with the goal of becoming the Netflix of gaming. From 2020 to 2022, the service’s subscribers will grow from 10 million to 25 million (a 150% increase), and Microsoft will be able to attract more game developers to create engaging content. to enhance the service.

In 2021, Microsoft acquired ZeniMax, the parent company of game developer Bethesda, for $7.5 billion to provide a lucrative game library. fall out When Elder Scrolls franchise. In 2023, the Windows company wants to buy. activision blizzard (NASDAQ: ATVI)developer of the most profitable game series of all time, call of duty.

Regulators around the world have put the deal on hold as they investigate antitrust concerns. However, a successful acquisition would make Microsoft the world’s third-largest gaming company, with compelling content to attract gamers to consoles and subscription services.

With a steadily growing gaming business and a strong position in other lucrative industries, Microsoft will invest heavily in January.