You probably heard the news by now…
Facebook (NASDAQ:FB) is changing its name to Meta (NASDAQ:MVRS) on December 1.
Facebook's Shift To Metaverse
The shift comes after CEO Mark Zuckerberg said Facebook is now a “metaverse company.”
This shocked many folks, but not RiskHedge readers. I introduced you to the metaverse in February—and showed you why it will be the new internet.
Today, I’ll show you two surefire ways to profit from Facebook’s historic shift.
But first, you’re likely wondering what this means for the 2.9 billion people who use Facebook every day?
- Facebook isn’t going away…
Facebook will still work like it does today.
You won’t have to log in differently. You’ll still be able to connect with friends and family.
Facebook is simply restructuring, just like Google did a few years ago. In 2015, Alphabet Inc. (NASDAQ:GOOG) became Google’s parent company. Alphabet holds Google, YouTube, smart-thermostat maker Nest, robocar leader Waymo, and others.
Meta will become Facebook’s parent company. It will own the social network and its other businesses including Instagram and WhatsApp.
But Facebook is changing in one major way. CEO Mark Zuckerberg just bet the company on the metaverse.
During a recent interview Zuckerberg said Facebook is “transitioning from people seeing us as a social media company to being a metaverse company.”
Facebook is going on a hiring spree to fulfill its ambitions. It plans to hire 10,000 employees for its metaverse division. And it will plow $10 billion into its metaverse business this year… and “expects this investment to grow even further for each of the next several years.”
What Is Metaverse?
- Stephen… remind me what the metaverse is again?
Today, we go online and look at Facebook, YouTube, and Google. These are static webpages. We see through our computer screens or phone screens. We use our mouse and touchpads to access them.
The metaverse will thrust you into an immersive world where you can work, learn, create art, shop, watch concerts, hang out with friends, and do dozens of other real-life activities.
The key is, the metaverse isn’t one specific virtual world. It’s the infrastructure that will bind all these different places together.
It’s similar to how the internet isn’t just Facebook or just Amazon (NASDAQ:AMZN). It’s the underlying technology that makes connecting with friends and shopping online possible.
The Next Big Thing
- Investors should follow the money trail…
The metaverse is THE next big thing. As investors, we simply cannot ignore it.
But that doesn’t mean you should rush out and buy Facebook stock. There’s a much smarter way to make money from this disruption.
Remember what Zuckerberg told us…
Facebook will plow $10 billion into its metaverse business this year… and even more in the following years.
In other words, Facebook will spend $100 billion+ over the next decade building out the new internet. This is by far the biggest investment by a US tech company in recent memory.
Where is the money going? Facebook told us most of the money will be spent on data centers, servers, and network equipment.
Although the metaverse is virtual, it will rely on physical real-world infrastructure… just like today’s internet.
The web runs on networks of fiber optic cables that move data around at lightning-fast speeds. AT&T (NYSE:T) and Verizon (NYSE:VZ) own over two million miles of cables in the US.
Internet giants like Facebook, Amazon, and Microsoft (NASDAQ:MSFT) also have hundreds of data centers dotted across the world. Facebook alone has spent $20 billion building server farms over the past decade.
When you watch a video on Facebook, it’s not streamed directly from Facebook’s HQ in California. That would take way too long. Instead, it’s sent to you from the nearest Facebook data center.
Breaking The Internet
- The metaverse would break today’s internet.
We already got a glimpse of this…
Last April, 12 million people watched hip-hop artist Travis Scott’s concert live in the hit game Fortnite. But they didn’t all watch it together.
Due to network constraints, Fortnite capped each showing at 100 people. It then ran 100,000+ separate showings of the concert.
Today’s internet can’t support the metaverse. It’s far too slow for an immersive 3D world that works more like a video game than an Amazon webpage.
In other words, we need a ton of new physical real-world infrastructure to bring the metaverse to life.
Profiting From Facebook's Spending Spree
- Here are two smart ways to profit from Facebook’s spending spree.
Last week, chipmaker Advanced Micro Devices (NASDAQ:AMD) soared 15% after it announced Facebook is adopting its Epyc processors in Facebook data centers. AMD should benefit from years to come as it acts a key supplier to Facebook’s metaverse.
Nvidia (NASDAQ:NVDA) also stands to make billions of dollars from the metaverse buildout.
Do you remember the blocky graphics on video games like Super Mario Bros. and Sonic the Hedgehog from the ‘90s? If you have kids who are gamers, you’ll know graphics have gotten far more realistic since then.
This incredible improvement is due to chips called graphics processing units (GPUs). Nvidia pioneered these chips, which help create these movie-like graphics.
Nvidia still makes the best GPUs on the market. Truckloads of them will be needed in order to build out a metaverse with life-like graphics. Keep in mind… Facebook is just the first company to embark on a metaverse spending spree. Microsoft, the world’s most valuable company, just announced it’s getting involved too.
Just like every company has an e-commerce strategy, many will have a game plan for the metaverse in the not-so-distant future.
That means tens of billions of dollars will flow toward the companies breathing life into the new internet.
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Article By Stephen McBride, Mauldin Economics