The gaming industry has experienced significant changes over the past few years. During the COVID-19 pandemic, the sector saw remarkable growth as more people spent time indoors. However, this momentum did not continue after restrictions eased, which led to lower consumer spending on games and consoles. Economic uncertainties and challenges like inflation further impacted the industry, resulting in layoffs, studio closures, and project cancellations across the industry in 2024. Despite these setbacks, analysts are optimistic about a recovery supported by upcoming major releases.
According to research firm Newzoo, video game consoles are expected to be the biggest growth driver in the market until 2027. The anticipated launches of GTA VI in fall 2025 and the new Switch console in summer 2025 are seen as key factors fueling a rebound. GTA V, the predecessor to GTA VI, is one of the most profitable games ever and has sold over 210 million by December 2024. Analysts believe new releases will encourage players to spend more on consoles and games. This could potentially reverse the industry’s recent slowdown.
According to the report by Newzoo, console software revenue is projected to increase 7% from 2024 to 2027 and outperform PC software revenue growth of 2.6%. By 2027, console revenue is expected to account for over 56% of the total PC and console software revenue of $92.7 billion. Total playtime increased by 6% in 2024 and Q4 saw the highest quarterly playtime thanks to blockbuster releases like the new Call of Duty title.
Emmanuel Rosier, director of market analysis at Newzoo, told Reuters that major console titles, such as Spider-Man and God of War, are driving engagement on consoles. He also pointed out that these AAA or AAAA releases have less impact on PC gamers, who prefer older titles.
To compile our list of the 10 best gaming stocks to invest in according to billionaires, we looked for the largest gaming companies. We reviewed our own rankings, financial media reports, ETFs, and various online resources to compile a list of the best gaming stocks. Next, we focused on the top 10 gaming stocks most favored by billionaires. Data for the number of billionaire investors for each stock was taken from Insider Monkey’s Q4 2024 database. Finally, the 10 best gaming stocks to invest in were ranked in ascending order based on the number of billionaires holding stakes in them as of Q4 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s Q4 2024 database of more than 1,000 elite hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Is Microsoft Corporation (MSFT) The Best Gaming Stock to Invest In According to Billionaires?
A close up of a person’s hands using a home console gaming device.
Number of Billionaire Investors: 39
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) is a leading technology company and a major player in the gaming industry. The company is known for its Xbox consoles and gaming services. In October 2023, Microsoft Corporation (NASDAQ:MSFT) completed its $69 billion acquisition of Activision Blizzard to grow its gaming business and bring popular franchises like Call of Duty, Warcraft, and Diablo under its umbrella. This transaction positioned Microsoft Corporation (NASDAQ:MSFT) as one of the largest gaming companies globally and opened new revenue streams across mobile, PC, console, and cloud gaming platforms. MSFT is one of the best gaming stocks to buy.
In October 2024, the company launched Black Ops 6, which became the best-selling game on Xbox and PlayStation for the quarter ending December 31, 2024. This release was described by CEO Satya Nadella as the “biggest Call of Duty release ever.” Additionally, Microsoft Corporation (NASDAQ:MSFT) released Indiana Jones and the Great Circle in December 2024, which has already attracted more than 4 million players. The company is focused on growing its gaming business through content and cloud gaming. For the second quarter of fiscal 2025, ending December 31, 2024, Xbox Cloud Gaming reached a record of 140 million hours streamed. Microsoft Corporation (NASDAQ:MSFT) reported that the Game Pass subscription service also achieved a new quarterly record for revenue and expanded its PC subscriber base by over 30%. The company plans to drive the number of paid subscribers across all platforms.
Overall, MSFT ranks 1st on our list of the best gaming stocks to invest in according to billionaires. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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