3 innovative actions that shape the future of the metaverse

Once upon a time, there were companies that wanted to change the world. But now some of the biggest tech giants are coming together with a new goal: to build an entirely new one. The virtual realm is officially known as the Metaverse, and it will change the way we live, work and socialize.

Three Motley Fool contributors think Meta-platforms (NASDAQ: FB), Matterport (NASDAQ: MTTR), and Nvidia (NASDAQ: NVDA) are the biggest game changers in this space, and they could overload your stock portfolio in the long run.

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Connecting the world in a whole new way

Anthony Di Pizio (Meta Platforms): Meta Platforms, formerly known as Facebook, has changed its branding to reflect its shifting focus on the metaverse. But its flagship social network is still the largest in the world with more than 2.9 billion monthly active users. Its secondary brands, Instagram and WhatsApp, are also hugely successful in themselves.

The company will seek to adapt its expertise by connecting people via on-screen social networks to this whole new virtual world where instead of profiles, its users will have their own avatars. CEO Mark Zuckerberg envisions these avatars having their own inventories of digital goods and the ability to teleport to different virtual experiences that many of us wish we could have in real life. But the financial opportunity could come from the metaverse having its own autonomous digital economy where users would pay for goods, services and even activities. It is conceivable that if Meta Platforms owns the virtual domain architecture, it could generate revenue on every transaction that occurs there. Think about how Apple makes money through the App Store: it owns the ecosystem and therefore has significant pricing power over those who operate there.

Zuckerberg recognizes that building the Metaverse will require a collaborative effort on the part of many tech companies, including the semiconductor producers who make the advanced chips that will bring it to life. But if Meta Platforms is as dominant in the metaverse as it is in social media, it could rank far above the other players involved.

The company is on track to have increased its annual revenue by 3,083% over the past decade to reach $ 117 billion this year. Still, that could be eclipsed in the future if the Metaverse takes off.

A room inside an office that is part real, part digital, and part sketched.

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Shaping the foundations

Jamie Louko (Matterport): The company focused on moving physical spaces to the cloud by creating 3D digital images of spaces. There are many things businesses can do with the “digital twins” of their buildings or spaces, such as putting them online for potential customers to take a 3D tour of the space. Matterport has been widely adopted by many renowned companies in various industries, such as Red tuna in real estate and Swinerton in construction, but that could extend to any company that wants to move its business to the metaverse.

These large and expanding use cases have led to impressive adoption. The company reported third quarter 2021 revenue of $ 27.7 million, which was up 10% year-over-year. This is explained by a growth in subscriptions of 36% to $ 15.7 million and spaces under management reaching 6.2 million, a jump of 62% from the quarter last year. The total number of subscribers more than doubled, reaching 439,000 subscribers on the Matterport platform.

What is not so hot is the profitability of Matterport. The company shows both net profit and negative free cash flow to a large extent. The company’s free cash flow so far this year is negative at $ 28 million, and the company recorded a net loss of $ 168 million in the third quarter, representing 600% of its revenue. . In the third quarter of 2020, the business was close to breakeven, but a 317% increase in operating expenses and a deterioration in gross margin tipped the company’s profitability in the wrong direction.

If Matterport can become an integral part of building the Metaverse over the next decade, its worries about the path to profitability may subside. Luckily for Matterport, his services are exactly what is needed to build the metaverse. The business can integrate physical spaces into the digital world, allowing users to create aspects of their real lives in the cloud.

Additionally, businesses that locate their spaces in the cloud can enable customers to shop online in a more immersive 3D environment. This is the key goal of the Metaverse, and Matterport clearly has the ability to make that vision a reality.

A computer chip manufacturing worker welds a semiconductor.

Image source: Getty Images.

A computing platform to power the metaverse

Trevor Jennevine (Nvidia): Nvidia specializes in accelerated computing. At the heart of its portfolio is the Graphics Processing Unit (GPU), a high-speed chip that can perform thousands of calculations at once. And as the name suggests, GPUs are particularly good at rendering ultra-realistic graphics in video games and movies. But these chips have also been adopted in data centers where they accelerate compute-intensive workloads such as artificial intelligence (AI).

To complement its hardware, Nvidia also offers a range of software and application frameworks optimized for GPUs: Merlin for recommendation engines, Metropolis for computer vision, Riva for speech recognition and NeMo for natural language processing. Collectively, these tools accelerate the development of AI-powered applications and form the basis of something much bigger.

Earlier this year, Nvidia announced Omniverse Enterprise, a platform that combines its expertise in graphics, artificial intelligence and supercomputing. Omniverse allows 3D creators (architects, engineers, developers) to collaborate in real time, through a range of 3D design software. It also serves as a physically accurate simulation engine, which means it can generate synthetic data sets. In turn, these datasets can be used to train AI models for robotic applications and autonomous vehicles.

More recently, Nvidia announced Omniverse Avatar, a platform for creating interactive avatars for AI, digital automata capable of seeing, speaking, thinking and understanding. In the short term, this technology could revolutionize customer service; CEO Jensen Huang believes smart avatars will provide assistance in 25 million physical locations (eg, retailers, restaurants, airports) and 100 million cars on the road. But in the long run, the implications are even greater.

Specifically, the smart avatars created in Omniverse will likely be a staple of the metaverse, as the presence of interactive digital characters will make the experience more immersive, creating more ways in which users can engage in a shared virtual world. In fact, the Omniverse platform itself will likely play a key role in shaping the metaverse as it allows 3D design teams from all disciplines and regions to collaborate in real time. This is why Nvidia seems like a great way to play with this emerging technology.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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