Video games continue to be one of the most popular forms of entertainment in the world. Nearly 50 years after the first video game consoles debuted, the industry is stronger and more diverse than ever. According to Midia Research, the video games industry will reach global annual revenues of more than $300 billion and a worldwide audience of 3.8 billion active players by 2030.
Consumers today are spending more on video games than they are on going to the movies, streaming TV shows, and many other forms of entertainment. For companies operating in the sector, gaming continues to be very lucrative, especially as the industry migrates online and away from brick-and-mortar retail outlets such as GameStop (NYSE:GME).
With the industry showing no signs of slowing down, we look at three video game stocks better equipped to beat the market slump than GameStop.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is such a diversified company that people forget it’s one of the biggest video game companies in the world. And Microsoft’s position within the video game sector has gotten larger and more influential following its successful $68 billion acquisition of video game publisher Activision Blizzard, which it completed last autumn. Today, Microsoft not only makes the Xbox console but also publishes popular video game such as “Call of Duty,” “World of Warcraft” and “Candy Crush.”
In its first-quarter financial results, Microsoft noted that revenue from the Xbox rose 62% year over year. This comes as it successfully integrates Activision Blizzard and benefits from sales of its games. Going forward, Microsoft says it is adding artificial intelligence (AI) to its video games to deepen the experience for users and make them more immersive. With MSFT stock, investors also get a leading AI, cloud computing and software company.
Microsoft stock is up 26% over the last 12 months.
Nintendo (NTDOY)
Japanese video game company Nintendo (OTC:NTDOY) is one of the biggest and best-known video game companies in the world. Video game characters such as Mario, Zelda and Donkey Kong are household names all over the world. The company had a great year in 2023 thanks to the release of the hugely successful animated “Super Mario Bros. Movie” and the release of a blockbuster new Zelda video game.
While NTDOY stock is up 26% over the last year, it has slumped in recent months on reports that the company is delaying the launch of its new Switch 2 game console. Nintendo has told game publishers that the next version of its flagship console will be delayed until 2025. The company initially planned to release a new version of the Switch this autumn in time for year-end holiday shopping.
The first-generation Switch console is now seven years old and analysts say a new version is needed. Despite its age, the Switch continues to be a worldwide bestseller with Nintendo forecasting 2024 sales of 15.5 million units. This video game stock has gained 26% over the past year.
Turtle Beach (HEAR)
Looking beyond console makers and game publishers, we have Turtle Beach (NASDAQ:HEAR), a gaming accessory manufacturer based in San Diego, California. In business since the dawn of the video game industry back in 1975, Turtle Beach today is primarily known for making headsets that gamers wear. Other products made by the company include controllers, joy sticks and even a mouse designed specifically for gaming.
Turtle Beach has built a rabid fanbase among gamers and this has led to brisk sales and a lofty share price. HEAR stock has been on fire this year, rising 63% since January. Over the last five years, the share price has doubled. Analysts like this video game stock and see more gains ahead. Currently, Turtle Beach stock has a “strong buy” rating and the median price target on the stock is $22.20 a share, which is 32% higher than where it is presently trading.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
