U.S. gamers spent $56.6 billion on video game products in 2022, and the total number of U.S. digital gamers is expected to reach 172.5 million by 2026, according to Insider Intelligence.
Video games are becoming more immersive and realistic by the day. Online gaming communities are now major social hubs, professional esports and streaming services have become billion-dollar industries, and the gaming boom is showing no signs of slowing down anytime soon. Mobile gaming has been a particularly strong area of growth in recent years.
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Here are seven of CFRA Research analysts’ top video game stocks to buy:
| Stock | Implied upside over May 4 closing price |
| Microsoft Corp. (ticker: MSFT) | 8.1% |
| Nvidia Corp. (NVDA) | 8.8% |
| Advanced Micro Devices Inc. (AMD) | 3.9% |
| Sony Group Corp. (SONY) | 17.6% |
| Activision Blizzard Inc. (ATVI) | 18% |
| Roblox Corp. (RBLX) | 39.2% |
| Take-Two Interactive Software Inc. (TTWO) | 18.1% |
Microsoft Corp. (MSFT)
Microsoft is the world’s largest software company. It also produces the Xbox gaming console and offers Xbox Game Pass and PC Game Pass subscription services. Microsoft has agreed to acquire video game publisher Activision Blizzard Inc. (ATVI) for $69 billion, but that deal has faced intense antitrust scrutiny. Microsoft pledged to continue to pursue the Activision acquisition even after U.K. regulators recently blocked the deal, arguing it would hinder cloud gaming competition. With or without Activision, analyst Angelo Zino says Microsoft is an excellent long-term investment. CFRA has a “strong buy” rating and $330 price target for MSFT stock, which closed at $305.41 on May 4.
Nvidia Corp. (NVDA)
Nvidia produces the high-end graphics cards needed for top-level game performance, which is one of the reasons Nvidia is the chipmaker of choice for a number of professional esports leagues and top-tier streamers. Zino says Nvidia is gaining momentum in several high-growth tech fields, including data centers, generative artificial intelligence and autonomous vehicles. Gaming hardware sales dropped 46% in the first quarter of 2023, but Zino says gaming demand is currently at “trough levels” of the current cycle. He projects 11% revenue growth for the company in fiscal 2024. CFRA has a “buy” rating and $300 price target for NVDA stock, which closed at $275.62 on May 4.
Advanced Micro Devices Inc. (AMD)
Advanced Micro Devices is a semiconductor producer and one of the world’s largest suppliers of PC microprocessors and GPUs. Zino says AMD will likely continue to gain data center CPU market share following the ramp up of the company’s next-generation EPYC processors. He projects gross margin expansion in the second half of 2023 as AMD’s sales mix shifts to newer, higher-margin products. Zino anticipates secular growth in GPU demand driven by machine learning and gaming. He projects revenue growth will rebound to above 20% in fiscal 2024. CFRA has a “buy” rating and $90 price target for AMD stock, which closed at $86.61 on May 4.
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Sony Group Corp. (SONY)
Sony is a Japanese consumer electronics conglomerate that produces gaming, entertainment, semiconductor and other electronic products. Its Sony Interactive Entertainment subsidiary is focused on video games and digital entertainment, including its PlayStation gaming consoles and related products. Analyst Hazim Bahari says Sony has a solid balance sheet, millions of loyal gaming customers and an evolving earnings strategy focused increasingly on content creation. Bahari says the PlayStation 5 and its associated software will be the company’s primary earnings growth driver over the next five years. CFRA has a “buy” rating and $109 price target for SONY stock, which closed at $92.67 on May 4.
Activision Blizzard Inc. (ATVI)
Activision Blizzard is one of the largest independent video game developers and is the maker of World of Warcraft, Call of Duty, Diablo and other games. ATVI shares dropped 11.4% the day U.K. regulators blocked the Microsoft buyout, and the stock is trading more than 20% below Microsoft’s proposed $95-per-share buyout price. Analyst Keith Snyder projects 10% compound annual net bookings growth over the next three years and says ATVI stock is attractively valued given Call of Duty is the most commercially successful video game in history. CFRA has a “buy” rating and $88 price target for ATVI stock, which closed at $74.59 on May 4.
Roblox Corp. (RBLX)
Roblox is an online entertainment platform that allows creators to develop games. The company’s service has 58.8 million daily active users, its own digital currency and a range of unique virtual experiences. Snyder says there are several reasons to like Roblox as a long-term investment, including user growth, improving global demographics and the proliferation of 5G wireless networks. He says rising global incomes and digital content creation will help Roblox generate at least 15% annual revenue growth in coming years. CFRA has a “buy” rating and $48 price target for RBLX stock, which closed at $34.48 on May 4.
Take-Two Interactive Software Inc. (TTWO)
Take-Two Interactive Software is a video game publisher and owner of key franchises that include Grand Theft Auto, Red Dead Redemption and Borderlands. Snyder says Take-Two shares are trading at a significant valuation discount to its historical average, and the company has a strong content pipeline that should help it maintain elevated player engagement. Snyder says Take-Two will benefit from rising disposable incomes in emerging market economies. He projects the company’s Zynga acquisition will help Take-Two generate 35% compound annual net bookings growth over the next three years. CFRA has a “buy” rating and $142 price target for TTWO stock, which closed at $120.28 on May 4.
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7 Best Video Game Stocks to Buy originally appeared on usnews.com
Update 05/05/23: This story was previously published at an earlier date and has been updated with new information.
