I’ve mentioned to you before just how amazing the profit potential in the exciting new world of the metaverse is.
Using AR and VR technology, the metaverse will involve overlaying digital technology onto our surroundings, as well as integrate real-world things into virtual environments.
The result is nothing less than the functional merger of the digital world with the real one.
Today, I want to reveal another great way to play the foundations of the metaverse as well as the computing world in general.
This Silicon Valley legend is one of the world’s top chip firms. It’s up 85% since I last recommended it back in June.
On top of that, it recently struck a deal with a major metaverse pioneer and is on pace to double its earnings in less than two years…
The Metaverse Market
Now then, in our previous metaverse talks, I recommended Apple Inc. as a key gatekeeper to the metaverse through its payment system and the app store.
I also showed you how Microsoft Corp. provides access to the metaverse to companies of all sizes and budgets through its cloud platform and its VR headsets.
Now, news accounts say that Mark Zuckerberg is committed to investing up to $10 billion in the field and even went so far as to rename his company Meta Platforms Inc.
By using AR and VR technology to enhance the real world and blending the physical with the digital, the metaverse has the potential to make life safer, more fun, and more informative.
We’re talking about small things, like having your GPS point at the turn to take and the lane to stay in as you’re driving, rather than having to take your eyes off the road.
Defense contractor Lockheed Martin Corp. already gives its workers headsets that show a 3D image floating next to each part, with a description of where it goes and how to install it.
That’s just the tip of the iceberg. Emergen Research says the metaverse had a $48 billion value last year. By 2028, it will be worth $829 for a gain of 1,627%.
Against this backdrop, Advanced Micro Devices Inc. (AMD) has just revealed Zuckerberg’s Meta Platforms as the latest tech giant to adopt their next-gen cloud processors.
Beating The Competition
See, historically Facebook (as the company was then called) has relied on AMD competitor Intel Corp.’s processors for its cloud data centers.
But AMD’s newest generation of Epyc processors, which are set to increase performance by 50% in cloud data center workloads, convinced Meta Platforms to switch over.
That means that four of the largest cloud companies in the world now use AMD processors: Amazon.com Inc., Microsoft Corp., Alphabet Inc., and now Meta Platforms as well.
Each one of those firms is pushing heavily into the metaverse, and their cloud computing divisions will play a big part in that.
This latest announcement not only puts AMD in a good position to claim half of the market share for the world’s data center processor market. It also makes AMD a crucial provider of the processors that will power the metaverse.
We can multiply our gains from the metaverse even further, and claim the biggest possible share of the $753 billion in new wealth that it is expected to create, even further by covering other aspects of the buildout.
I’m talking about the data collection needed to simulate environments, the hardware needed to allow users to interact with the metaverse, and even a cryptocurrency that supports the sector.
Taking The Lead
Of course, there’s much more to AMD than only processors for data centers. The company has long existed in the shadows of its four times larger competitor, Intel.
But under its current CEO, Lisa Su, AMD has been punching above its weight.
A few years ago, while Intel was complacent with its undisputed leadership position in the consumer market for PC processors, AMD swept in and delivered a killing blow: cooler, more power-efficient PC processors that were faster and cost less money.
AMD is also the sole processor and graphics chip provider for both the Playstation 5 and the Xbox Series X and S. So as gaming becomes more and more popular, AMD has profited regardless of whether gamers chose PCs, Playstation, or Xbox.
No wonder AMD is crushing Intel in sales and earnings growth. Consider that over the past three years, Intel has grown its sales by roughly 8%, and earnings at 25%.
By contrast, over that same 3-year time frame, AMD has grown its sales twice as fast. And when it comes to earnings growth, the firm is a high-octane beast with an average yearly growth rate of 94%.
At that rate, they’re doubling roughly every nine months. That means AMD has had one of the best earnings growth rates in all of Silicon Valley.
So, it’s no surprise to me that since I last recommended the stock last June 1, AMD is up 85%, more than nine times that of the S&P 500.
Now, I still see a lot of upside ahead. AMD recently posted a 78% increase in earnings per share, off a bit from its three-year average.
Still, let’s cut that back by half to be conservative. If we do, we’d still see AMD’s earnings double in just a little under two years.
Goes to show that the path to long-term metaverse profits is like much of the economy itself – it’s built on great tech.
Cheers and good investing,
— Michael A. Robinson
Source: Strategic Tech Investor