The Metaverse was announced less than two years ago. lost attention from the community.However, this does not necessarily mean that development It’s not happening behind the scenes.Despite the challenges, developers We continue to find solutions and work towards the realization of this long-awaited virtual reality project. In the long run, I think the Metaverse could become an integral part of many people’s lives without actually replacing reality. ideaThat said, the Metaverse is still a developing concept, so I think it’s very difficult to fully grasp the potential of the Metaverse. For these reasons, I recommend the Roundhill Ball Metaverse ETF (NYSEARCA:METV) a hold.

The metaverse could gain serious momentum in the coming years, and recent performance by the Meta Platform (META) have a positive outlook. Meta isn’t his main METV property, but the Metaverse is ultimately a product of Meta. With this in mind, Mark Zuckerberg’s “year of efficiency” may attract aspiring metaverse users and enthusiasts in the near future.The Metaverse is Already Making Strong Results Earnings in the first quarter This exceeded analyst estimates.

Metaverse prospects have been on the rise recently, but vague and innovative concepts like the Metaverse are prone to speculation and irrational optimism by investors, which could create a bubble in the future. is also slightly overvalued, and this may continue or worsen as some big tech and AI stocks gain momentum. That said, the medium-term outlook for this ETF can be very volatile. Because more investors ponder these potentially profitable but risky industries.

strategy

METV tracks the Ball Metaverse TR USD Index and uses perfect replication technology. The designated index consists of companies that facilitate the Metaverse by contributing products, technologies, services, or technical capabilities to this future expansion of the Internet. To be included in this benchmark, a company must have a market capitalization of at least $250 million and his average daily trading volume of $2 million over the past six months. The companies included cover a variety of services including but not limited to hardware, networking, virtual platforms, and payments. Companies are further classified based on their level of association with the metaverse. In this regard, eligible names are ranked from “Pure-Play” companies to “Non-Core” companies.

Holding analysis

The ETF invests primarily in technology and telecommunications companies, with a meager 10% stake in stocks that do not belong to these sectors.

More specifically, METV’s holdings are primarily focused on computing components and gaming platforms, as shown in the chart below.

METV is primarily dabbling in the US market, with non-US regions such as China, South Korea and Japan accounting for just under a quarter of its geographic composition. In addition, METV’s top 10 holdings make up just over half of the ETF’s total of 55 holdings. This ETF can be considered somewhat top-heavy and investors may want to consider it. Alternatively, it can appeal to more investors because it provides greater transparency and makes it easier to know exactly what stocks you’re tracking. METV’s top holdings are NVIDIA (NVDA), Apple (AAPL), and Meta, which together account for about a quarter of the fund.

What’s next for MetaVerse

growth forecast

Metaverse growth projections are fairly strong and we believe rapid technological advancements will serve this virtual space in the long term.At a CAGR of 45%, the global metaverse market will grow to over $1.3 trillion by 2030 There is likely to be.

Strong growth forecasts have led to new METV-like ETFs in 2023. Namely, the iShares Future Metaverse Tech and Communications ETF (IVRS) by Blackrock appeared in his February. Like BlackRock, more portfolio managers are likely to start taking advantage of the expanding metaverse. This could increase the price of METV in the long term.

Artificial Intelligence and the Metaverse

The growth and innovation of artificial intelligence (AI) could enhance the metaverse experience and ultimately make it a more attractive and profitable investment. Specifically, AI’s increasing resemblance to humans could enable more intimate and meaningful interactions with the metaverse. non-playable characters (NPC) At some point. Additionally, AI can also enhance the visual aspects of the metaverse by creating a virtual environment that closely resembles the real one. This potential has become very pronounced recently based on how much impact AI is already having. visual arts industry.

Finding momentum at the forefront of METV

METV’s top-heavy design allows NVIDIA and Apple to make a difference for the long term.Considering the present trends and predictionsthese two stocks could give this ETF the right momentum.

NVIDIA

NVIDIA is traction With both the metaverse and AI becoming more prominent in the tech scene these days, I think this momentum could move METV in the right direction. Specifically, NVIDIA recently announced new AI cloud services and new open source safeguards for generative AI. These new measures are called “.nemo guardrailOver time, I think NVIDIA could become the backbone of the AI ​​wave. As AI becomes more sophisticated, the Metaverse may eventually provide users with an overall better experience, pushing up the price of this ETF of his.

apple

Apple could bring stability and momentum to METV going forward. Because this juggernaut of technology is likely to be at the forefront of most innovations and trends. Apple’s ability to outperform has only recently strengthened after Apple’s profits exceeded estimates. iPhone sales surprisingly high.As the metaverse becomes a more comprehensible and profitable concept, I hope Apple will fully embrace this trend. Therefore, METV’s prominent Apple stock could be the underlying strength of this ETF of his for the foreseeable future.

what’s going wrong

speculation and overestimation

New technologies like artificial intelligence can offer great opportunities for profit, but they are often highly susceptible to irrational speculation and hype. As a result, stocks such as NVIDIA and Apple tend to be overvalued. For example, in the current AI and technology hype, NVIDIA and apple These days, they’re trading far above what investors perceive to be their intrinsic value. As the market will often correct such overvaluations eventually, METV’s price may fluctuate significantly over the long term as technological innovation becomes even more attractive and seemingly profitable. This case may also explain the high volatility of this ETF of his, as shown below.

Scrutinizing AI

AI’s ability to benefit humanity and the Metaverse seems limitless. get hurt These same parties. Harmful abilities of AI include perpetuating existing biases, economy and labor marketThe latest examples of this change have appeared at Adobe (ADBE) and Chegg (CHGG). Shares of these companies have plummeted over concerns that AI will put these names out of business. As such, AI may come under greater scrutiny, from simple lawsuits to US regulation. federal governmentSuch regulations could create barriers to the development and profitability of the Metaverse should this virtual reality choose to leverage AI integration.

Conclusion

I think over time the metaverse could become a hotter investment opportunity as it becomes more of a reality and less of a vision. That same stock could rake in a lot of cash from ongoing innovation in tech areas like AI. I don’t think it would be a struggle. For these reasons, I rate this ETF as a long-term hold.