Gaming Stocks: Top 10 Stocks to Bet on in the Video Game Industry
The video game industry is anything but child’s play. Consider that the gaming market was worth $151 billion in 2019 and it’s expected to nearly double in size by 2027.
Many companies spend years and millions of dollars creating hit games for which consumers pay a pretty penny, play for years, and then fork over additional money to pay for content updates and in-game purchases.
And it’s not just console games that bring in the big bucks. Mobile gaming has exploded over the past few years and now accounts for half of all video game revenue.
And therein lies the potential for investors. Consumers are spending more on video games than ever before and they’re not quitting this market any time soon.
Below, we’ll take a look at the top 10 gaming stocks for investors that have the potential to dominate the industry for years to come.
Best Video Game Stocks for Investing
- Activision Blizzard
- Take-Two Interactive Software
- Electronic Arts
- Roblox Corporation
- Tencent Holdings
- Sony Group
Activision Blizzard (NASDAQ: ATVI)
We’re kicking off our gaming stock list with one of the biggest and most influential publicly traded gaming companies. Activision Blizzard is extremely important to the industry.
Even if you’re not a gamer, you’ve still probably heard of these video games: Call of Duty, World of Warcraft, and Candy Crush Saga. What do they all have in common? You guessed it: they were all distributed by Activision Blizzard.
To give you an idea of just how big a player Activision is in the gaming space, consider that in 2020 the company’s Call of Duty franchise had more than 100 million monthly active players. From just one franchise!
The company experienced a banner year—thanks in part to so many people spending time at home because of the pandemic—with revenue climbing 24% and reaching an astonishing 400 million players around the world.
Activision spreads its gaming love across multiple platforms these days, with titles on gaming consoles, mobile, and PC games. Even with the company’s impressive 2021 results, it expects its gaming development pipeline is on track “to fuel further growth in 2022 and beyond.”
And if you’re still thinking gaming is just for kids, consider that if you invested in Activision when it released its first Call of Duty game in 2003, you’d be sitting on gains of 5,000%.
Take-Two Interactive Software (NASDAQ: TTWO)
Take-Two is a towering presence in the video game industry thanks to the long-running and still massively popular Grand Theft Auto (GTA) franchise. Side note: You’re probably starting to see that winning franchises are very important in the gaming market. And GTA has proven to be a runaway success for Take-Two.
After Grand Theft Auto V was released back in 2013, the game generated $1 billion in sales in just three days. And it’s now the second-best-selling game of all time with more than 135 million copies sold.
Why are we talking about a game that was released nearly a decade ago? Because Grand Theft Auto V was still one of the best-selling games in 2020. That’s right, more than eight years after the game was released, it continues to be a top-seller, thanks to the online version of the game that can be played on newer consoles.
And with GTA 5 and GTA Online coming to the new Xbox Series X, Xbox Series S, and PlayStation 5 (PS5) very soon, this franchise continues to print money for Take-Two.
But lest you think Take-Two is just a one-trick pony, consider that the company also makes the massively popular NBA 2K and Red Dead Redemption, and has plans to release 93 new games in the next five years.
Electronic Arts (NASDAQ: EA)
Another behemoth in the gaming industry is Electronic Arts and its insanely popular sports games that include both Madden NFL and FIFA. The latest version of FIFA already has more than 25 million PC and console players and the company said that Madden had a “record number of new players” in fiscal year 2021.
Those two gaming titles are also very important to the company because of the fast-growing esports markets. EA hosts esports competitions between players for both of those games, creating a tournament-style game for its customers.
But EA is more than just sports. The company also creates the hit Star Wars games, Battlefield, and the epic battle royale title Apex Legends. To give you just a hint of the scale of Apex Legends, the company said at the end of its fiscal year 2021 that Apex had more than 100 million players over the lifetime of the game, and Season 8 of the game had more than 12 million weekly average players.
And then there are EA’s mobile gaming ambitions. The company acquired Glu Mobile in mid-2021, helping EA to expand its network of 100 million monthly active mobile players and “creating a market-leading portfolio of more than 15 top live services.”
Capcom (OTC: CCOEF)
Even casual gamers will recognize Capcom as the company has been around nearly as long as the video game industry itself.
Capcom built its name on titles like Mega Man and Street Fighter—and it still has current versions of the games—but it’s also expanded its reach with popular franchises including Resident Evil and Monster Hunter.
The company may not have the breakaway hits some of its peers are producing, but that doesn’t mean investors should overlook this industry titan. Capcom has had eight consecutive years of operating income growth and four years of record high profits.
More to the point, if you’d invested in Capcom just five years ago you’d be sitting on gains of 450%.
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Roblox Corporation (NYSE: RBLX)
If you haven’t yet heard of Roblox then let me be the first to introduce you to one of the most innovative companies in the gaming industry… literally. Fast Company named Roblox the most innovative gaming company in 2020 and it easily deserves the title.
Roblox is a video game platform that allows its users to also create their own games. Think of it like Apple’s (AAPL) App Store or Google‘s (GOOG; GOOGL) YouTube—you can either spend hours consuming content or make your own (or both!). The point is that there’s virtually nothing else like it in the video game industry.
Roblox has amassed a very impressive following with more than 42 million daily active users, has 8 million developers creating games for its platform, and now has more than 100 million global active users.
Roblox went public in mid-2021 so investors who recognize how transformational the company could be for the video game industry could be getting in early on something that could be very big just a few years from now.
Tencent Holdings (OTC: TCEHY)
Buying video game stocks doesn’t necessarily mean you need to buy pure-play stocks. And Tencent is the perfect example.
Gaming is one of the company’s core businesses but it also has its hands in other businesses including online advertising, social networking, e-commerce, and more. But the China-based company is still a huge name in the gaming industry partly because it owns a 40% stake in Epic Games, the maker of the gaming phenomenon Fortnite.
But Tencent benefits from the gaming market from far more than just Fortnite. The company also acquired Riot Games in 2015, giving it ownership of the Honor of Kings, the top-grossing mobile game worldwide for two years running and the most popular mobile game in China (by monthly active users).
All of Tencent’s partnerships and its reach in the Chinese gaming industry should be more than enough to put the company on investors’ radar. China’s mobile and PC gaming market will reach nearly $47 billion by 2024, and with 772 million Chinese gamers expected to be playing by that time (that’s a lot of gamers!), investors need to keep a close eye on Tencent’s gaming potential.
Zynga (NASDAQ: ZNGA)
Zynga gained massive notoriety years ago when its popular Farmville game became one of the most popular Facebook (FB) games ever. Since then, the company has successfully moved on from the social media platform to become a leading mobile gaming company.
Some of the company’s most popular games include CSR Racing, Toon Blast, and Empires & Puzzles, as well as new versions of Farmville and Words with Friends and the company proved in early 2021 that it’s still an important gaming contender.
Zynga’s mobile average daily active users skyrocketed 85% in the first quarter of 2021 and mobile active users exploded 139% to 164 million.
The company is also expanding into new territory in 2021, proving it can still innovate, and says that it will have its first cross-platform game, Star Wars: Hunters, playable on both mobile and Nintendo’s Switch console.
Zynga’s stock can be volatile, but investors should take note that over the past three years, Zynga’s stock has easily returned 3X the gains of the S&P 500.
Sony Group (NYSE: SONY)
We can’t talk about video game stocks without spending time on the tech stocks that make much of the gaming industry possible. And one of the most important gaming companies of all time is Sony and its PlayStation consoles.
Out of the top five best-selling gaming consoles of all time, Sony holds three spots, including the No. 1 slot. The PlayStation 2 (PS2) has outsold every other console with an estimated 159 million units sold to date.
And Sony’s betting the PS5 could be an even bigger winner. The new console sold 7.8 million units in just four months, far more than some had estimated. It could have sold even more last year (thanks to most people staying at home during the pandemic) if there wasn’t a chip shortage that’s held up the supply chain.
Once chips are back in supply, Sony could sell an estimated 67 million PS5s by 2024. But that’s not its only gaming play.
The Japanese tech company also makes money from its online gaming service, PlayStation Network, which has 100 million monthly active users. About half of all of those users pay to subscribe to Sony’s PlayStation Plus (at $60 a pop per year) and business is booming.
Sony’s Game and Network Segment sales soared 104% in fiscal 2020 and accounted for about 30% of the company’s total revenue.
With a successful launch of the PS5 already accomplished and millions of subscribers signing up for a PlayStation Plus subscription, Sony’s still a fantastic long-term play in the video game market.
Microsoft (NASDAQ: MSFT)
The other major player in the gaming console space is, of course, Microsoft and its Xbox. Sony and Microsoft have been locked in a battle royale since Microsoft released the first version of its Xbox back in 2001 and the console face-off is as vigorous as ever.
Microsoft released its new Xbox Series X and Series S around the same time as the PS5 and estimated sales for the devices were about 3.3 million, but that figure is expected to rise to a staggering 30 million by 2023.
And, just like with Sony, the microchip shortage is keeping those figures below what they would have been. Microsoft said that demand for its consoles “significantly exceeded” supply in the first few months of 2021.
Gaming revenue spiked 50% in the most recent quarter and hardware sales skyrocketed 232%. And Microsoft’s own hit game, Minecraft, now boasts 140 million monthly active users.
Microsoft uses its consoles to feed sales of software and subscriptions on the Xbox—and also sells Xbox games on personal computers (PCs)—and with the company’s latest console already performing well, it looks like Microsoft is setting itself up for years of growth on that front.
Nintendo (OTC: NTDOY)
It’s fitting that we should end this list of top video game stocks with Nintendo. The company may be one of the most iconic names in the video gaming industry and nearly 40 years after releasing its Nintendo Entertainment System (NES) in Japan, the company is still a major console player.
Nintendo released its latest gaming system, the Nintendo Switch (which can be used as a console or handheld gaming device), back in 2017 and to date the company has sold nearly 85 million units.
The company had a banner year in fiscal year 2021 as operating profits spiked 82% and the company sold 231 million games.
Nintendo’s gaming success can be hit or miss, but the company is on a winning streak right now with its Switch, which could be the company’s most successful console to date.
The company has proved time and time again that it can win over consumers and investors alike, with Nintendo’s stock doubling the S&P 500’s results over the past five years.
Video Game ETFs: Invest in the Best Stocks in Gaming
If you’re unsure of how to pick the best stocks from this list, you can always invest in a gaming exchange-traded fund (ETF) that gives you exposure to a handful of gaming stocks all at once.
Two of the top video game ETFs are Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD) and Global X Video Games & Esports ETF (HERO).
Video Game Stocks: Frequently Asked Questions
What are some of the best video gaming stocks?
Over the past five years, Capcom, Microsoft, Take-Two Interactive, Zynga, and Nintendo have been the best stocks from this list. Each of the companies has returns of 300% or higher between May 2016 and May 2021.
Are gaming stocks a good buy?
Many video game stocks have proved to be great long-term investments that have returned larger gains than the S&P 500, a benchmark for the stock market. During the COVID-19 pandemic, the video game industry was especially robust and benefited from an increase in demand from consumers.
How do you invest in gaming stocks?
Investors can choose from a variety of gaming stocks listed on the Nasdaq exchange or the New York Stock Exchange via a stock brokerage company. Investors can also buy an exchange-traded fund (ETF) that provides exposure to a basket of stocks.