3 Video Game Stocks Offering a Growth Opportunity

Josh Enomoto

February 29, 2024 4 min read

Back when digital entertainment originated, parents of that generation – essentially baby boomers – must have balked at the idea of video game stocks. To them, it must have sounded like making money for merely brushing one’s teeth.

Considering the wild trend of social media, the boomer’s worst fears (and more) have fully materialized. But in all seriousness, the gaming industry is no longer a niche sector targeting the young and the friendless. Instead, these days, it’s kinda weird if you don’t like digital interactive entertainment; hence, the bullish case for video game stocks.

Even better, with rising technologies, consoles and platforms deliver even more compelling and visually stunning artificial environments. Stated differently, this sector is likely only going up. On that note, below are video game stocks to consider.

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Microsoft (MSFT)

Microsoft logo close up. Microsoft (MSFT) Flagship Store Fifth Avenue, Manhattan, NYC.

Source: The Art of Pics / Shutterstock.com

A multinational technology giant, Microsoft (NASDAQ:MSFT) commands a massive footprint. These days, the company is perhaps best known for its investment in artificial intelligence. Clearly, that move has paid off. Since the beginning of the year, MSFT is off to a solid start, gaining 10% of equity value. In the past 52 weeks, it’s up almost 66%.

However, let’s not forget that Microsoft ranks among the top video game stocks to buy. Obviously, the company manufactures the Xbox video game console, which continues to resonate with fans worldwide. Also, the tech juggernaut acquired gaming giant Activision Blizzard last year. With that purchase, Microsoft has ample room to expand on its many popular titles, particularly the Call of Duty franchise.

What I also appreciate about MSFT as one of the video game stocks is the underlying synergies. With Microsoft investing heavily in virtual reality headsets and accessories, it’s poised to take digital interactivity to new heights. If you love gaming, MSFT is a clear buy.

Take-Two Interactive Software (TTWO)

Take-Two Interactive Software, Inc. (TTWO) is an American video game holding company. A smartphone with the Take-Two logo on the screen surrounded by gamepads.

Source: Sergei Elagin / Shutterstock.com

If you don’t mind taking a speculative wager regarding your video game stocks, take a look at Take-Two Interactive Software (NASDAQ:TTWO). Is it as reliable an investment as Microsoft? It’s just my opinion (and everybody has one) but I’d have to go with a hard “no.” But does it have superior upside potential? I’d say that’s a firm “yes.”

Part of the reason centers on reduced expectations. As Investor’s Business Daily reported, the video game publisher whiffed on guidance for its March quarter. Management sees adjusted earnings of just 5 cents per share on net bookings of $1.29 billion. In sharp contrast, analysts were modeling for adjusted earnings of 94 cents on net bookings of $1.51 billion.

Take-Two’s CEO blamed the underperformance on weak sales of its frontline titles. Still, despite rumors of its Grand Theft Auto sequel being postponed, the reality is that this franchise is incredibly popular. So, when it does come to fruition, TTWO should soar.

Analysts continue to peg TTWO as a consensus strong buy with a $178.40 (implying 21% upside).

Nintendo (NTDOY)

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As one of the video game stocks, Nintendo (OTCMKTS:NTDOY) might seem like an outlier. Sure, it’s gaming royalty. Without Nintendo, we really wouldn’t have the massive ecosystem that we see in the industry. However, the company has also focused on family-friendly entertainment. In an environment where video game publishers are seemingly pushing the boundaries of violence and grittiness, the Japanese icon appears as the odd man out.

However, this dynamic might also favor NTDOY stock. Frankly, many families are likely worried about the surge in violence in mainstream and digital media. Further, with gun violence skyrocketing in the U.S., an examination of the gaming industry can take place. That’s a risk factor for the companies that run popular shoot-‘em-up titles.

In contrast, Nintendo provides a counterweight: entertainment that’s not politically objectionable and appropriate for any age. Further, the company benefits from the nostalgia market like no other. Analysts are optimistic about NTDOY stock but don’t provide a price forecast. I think it’s one of the bets that has the potential to surprise in the long run.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.