Bernstein likes these software stocks to play the future of the metaverse

Published Thu, Jan 13 20221:54 PM ESTUpdated Thu, Jan 13 20223:40 PM EST

The popularity of the metaverse has boomed in the last year, and Bernstein highlighted a handful companies that could win big from the emerging trend. The firm looked at the cloud and software companies in its coverage universe and determined that three could see meaningful upside: Adobe , Salesforce and Microsoft . Of the three, Microsoft is the company it sees as "best positioned to be a big winner from the metaverse" and "extremely well positioned having almost all of the major capabilities required to deliver a metaverse platform today," analyst Mark L. Moerdler said in a note Thursday. Moerdler emphasized how early in the metaverse game it is, noting that big winners may not even exist yet, but "having not just a horse in the race but one with the strength and stamina is, in our opinion, the best bet." There'll be different ways to monetize the metaverse, including platform access, vendors doing business and providing experiences in the metaverse, marketing within the virtual world, content creation, display devices like headsets and social experiences, Moerdler wrote. Microsoft is years into its journey and vision for the metaverse, according to the Bernstein note, with initiatives like its smart glasses business HoloLens and Mixed Reality headset, as well as Microsoft Teams and LinkedIn. "Microsoft is delivering on what many expect will be needed for the metaverse," Moerdler said. "While this potential next driver of growth is not part of our thesis today, it could be a meaningful driver for numerous parts of the business." Salesforce could have big potential upside from digital marketing and e-commerce, according to Bernstein. While Microsoft makes Teams a more immersive experience, Salesforce will have to react and Bernstein expects it to make acquisitions that help it capture IP, market position, market share and revenue. For Adobe, its Creative Cloud could add a lot to the metaverse and the content creators in it. "Creative Cloud is all about creating content and the metaverse will be all about consuming content, creating a significant upside potential for the Creative Cloud especially as more and different types of content creators will be required," Moerdler said.

Surgeon Shafi Ahmed poses for a photograph wearing a Microsoft HoloLens headset inside his operating theater at the Royal London Hospital on Thursday, Jan. 11, 2018.

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The popularity of the metaverse has boomed in the last year, and Bernstein highlighted a handful companies that could win big from the emerging trend.