Call Of Duty: Black Ops 6 Leads Video Game October Sales In The US

The top headline in the semiconductor industry this week was the latest quarterly earnings report from artificial intelligence (AI) chip market leader Nvidia , which traded mixed on Thursday after Q3 results that once again surpassed expectations. Analysts responded positively to Nvidia's results, with most on Wall Street reading the quarterly report as a resoundingly bullish signal for strong AI demand going forward.

NVDA stock set a new high above $152 after earnings before paring gains, and is up about 191% in 2024. Meanwhile, its top rival Advanced Micro Devices remains on negative ground for the year as 2024 draws to a close, down 6% on a year-to-date basis.

Why is AMD Stock Underperforming?

While AMD is up more than 4,800% over the past decade, the shares have failed to impress investors this year. Declining revenues in its gaming and embedded segments have offset enthusiasm over strength in its data center segment, and the company has invested heavily in acquisitions as it attempts to compete with Nvidia in the AI chip market.

As a result, AMD is looking to cut costs, and the stock fell recently on news that the chip specialist plans to trim its workforce by 4%.

While equity benchmarks have rallied to new record highs this month amid broad-based post-election optimism, AMD is down 39% from its year-to-date highs, set in March. But after a “rebuilding” year of strategic investments in AI, should investors consider buying the dip in AMD stock?

If you are a gamer, you are probably playing on a console like X Box. Three main players – Sony Group , Nintendo and Microsoft — control that market. Then there are the newcomers. They operate in the blockchain universe: the so-called Web3 games. Analysts estimate Web3 gaming’s market size at $23.9 billion, about half the size of the console gaming market.

Investors have an upside here, however. Market analysts forecast Web3 gaming compound annual growth rates (CAGR) somewhere between 18.7% to 30%. Console gaming CAGR: 4.8%.

Web3 gaming taps into the cryptocurrency, decentralized blockchain hype. That is what separates them from traditional video games. In the most bullish case, the market could hit $133 billion by 2030. Analysts expect the console gaming market size to reach around $73 billion in 2027.

These forecasts might be why Sony is building a blockchain called Soneium to support Web3 games. No word yet on rivals Microsoft and Nintendo doing the same.

"Our goal is to make Web3 games as enjoyable as the ones you play on your Xbox, but with less hassle. Browser games are more versatile; you can play them on your TV by connecting your laptop, and you can take them with you when you travel," said Riccardo Sibani, Chief Product Officer at My Neighbor Alice, a blockchain-based game.

Web3 games are similar to traditional PC games in some ways. Some key differences are:

• Wallet Connection: Most Web3 games require a cryptocurrency wallet to play. It acts as your identity and stores any in-game assets or tokens in play-to-earn games.
• Browser-based: Many Web3 games are browser-based, allowing gamers to play directly in a web browser after connecting a wallet.
• Downloadable Clients: Complex Web3 games often require users to download a dedicated game client, similar to traditional online games. Australia-based Illuvium (ILV) is an example of this type. ILV is down considerably year-to-date.

They also differ from console games and traditional PC games as they allow for in-game transactions, which means players can buy "assets" like non-fungible tokens (NFTs). Recent market shifts destroyed these asset values from an investor standpoint.

NFT trading volumes fell by 61% from $3.1 billion to $1.2 billion dollars, based on CoinGecko data. NFT loan volumes dropped by around 74% to $284 million. The fortunes of Web3 gaming tie many NFTs to their success. This segment of the digital assets market has not recovered from its 2021 highs despite recent gains.

"A fully decentralized game, unlike console games, cannot just disappear. You keep the ownership of the items you bought, and they can be used in different games and decentralized applications," said Sibani, comparing Web3 in-game purchases to those one makes to upgrade console games that are usually not transferable to new versions of the same game. "Some major NFT collections are usable across various games. That level of interoperability is unheard of in traditional games," he said.

Paul Thomas, founder of the blockchain project Somnia –- a blockchain geared towards Web3 gaming and other applications — said that despite the bear market, Web3 games are getting better and the user base is growing.

"Critics say that it's time to start giving people high-quality games they can't put down, and games that they would play without the financial incentives in play-to-earn models," he said. "I think those incentives should just be an added bonus, not the main reason you're playing the game. We are seeing this shift happening already. Look at Pirate Nation (PIRATE), Parallel,or Off the Grid — they all are engaging games that have kept people hooked. They attracted players, not just cryptocurrency speculators," he said.

Blockchain Gaming Growth Stories and Newcomers

Web3 gaming ranked fifth in the digital asset markets for venture capital raised in 2024, according to RootData.

The gaming sector has attracted some $580 million in investments, ending in the third quarter. Blockchain games have about 4.2 million daily active users as of August, according to a DappRadar report.

Gamer blockchain Ronin (RON) leads this space based on unique active wallets, thanks to super popular games like its flagship game Axie Infinity (AXS) and now Pixels.

(See Benzinga interview with Pixels founder here.)

Pixels reportedly hit over 1 million daily active users (DAUs) for the first time in May, although this number has since fallen to around 725,000 DAUs.

"I'm excited about games like Shrapnel (SHRAP), Unioverse (a first-of-its-kind composable IP-as-a-service platform), and IconX(ICNX), with their tokenized game management layer for e-sports," said Alex Casassovici, CEO and Founder of Azarus, a San Francisco-based blockchain gaming and live streaming platform.

He also mentioned Off the Grid, which is traditionally a console and PC game made by Gunzilla Games out of Frankfurt. The third-person shooter game recently launched a Web3 version on Epic Store and hit 900,000 concurrent users.

"If they maintain that momentum, they could help bring Web3 gaming mainstream," Casassovici said.

Gunzilla is privately held. Accredited investors can potentially invest in Gunzilla Games through platforms like EquityZen, which offers pre-IPO shares.

Web3 is a growth story.

"Gamers are everywhere. Many haven't made the jump to Web3 gaming yet," said Sibani.

Web3 Gaming Hype and the "Degens" that Ruin Markets

The sector is a victim of its own hype. Investors have paid the price. Timing is everything in these alt-coins, which have moved wildly thanks to what the crypto market refers to as "degens".

The degens, or "degenerates" to put it bluntly, refers to the player or investor who speculates on blockchain-based games and platform tokens. They often invest heavily in new or unproven games and build up their hype. There's tons of pump and dump. That trade has killed the sector as an investment theme, and made it roulette wheel.

"There is good reason for the criticism of this market. Web3 games have been built to generate yield, not fun. They attract people looking for quick gains, but then it all crashes when the hype dies down, and users disappear," said Casassovici.

With Azarus and Stream, "It's not about players buying from each other to pump up items," Casassovici said. "Our Watch, Play, and Earn model is about creating value from activities people already enjoy, then sharing it with stakeholders. No wash trading; no market manipulation."

Thomas from Somnia predicts 2025 will see Web3 games breaking out of their primarily Web3 gamer audience and will attract more of the traditional console and PC gamer.

"Web3 has a really bad rep from console and PC players, especially in the U.S.," Thomas said. "People have a misconception that everything in Web3 is play-to-earn or is just there to exploit cryptocurrency traders. Now we are seeing a lot more games where those Web3 components are optional or hidden unless the player wants to find them. I think that this subtle introduction will work to get more gamers familiar with Web3 and realize that it’s basically just Steam (a digital distribution platform for PC games developed by Valve Corporation) with better fees and more freedom," said Thomas. "You have major game streamers like Shroud talking about blockchain when he is playing Off the Grid," he said. "We are seeing the changes develop."

*The writer of this article is an investor in the Decentraland token.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

For Immediate Release

Chicago, IL – November 22, 2024 – Zacks.com announces the list of Stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Adobe ADBE, Microsoft MSFT, International Business Machines IBM and Alphabet GOOGL.

Here are highlights from Thursday’s Analyst Blog:

3 Reasons to Buy Adobe Stock Despite -19% Selloff

Adobe shares have declined 19.4% in the trailing 12 months, underperforming the broader Zacks Computer & Technology sector’s return of 32.9% and the Zacks Computer Software industry’s appreciation of 16.9%.

ADBE suffers from a challenging macroeconomic environment, which has negatively impacted the Digital Media segment, and intensifying competition in the generative AI (Gen AI) space.

However, Adobe’s prospects are expected to benefit from a strong demand for its creative products. Its Creative Cloud, Document Cloud and Adobe Experience Cloud products have been driving top-line growth.

ADBE’s strong positioning in the digital content and marketing industry, backed by its robust cloud-enabled products and growing GenAI capabilities, has been boosting its business prospects.

Rising subscription revenues and solid momentum across the mobile apps are major positives. Growth in emerging markets and robust online video creation demand remain tailwinds for Adobe.

For the fourth quarter of 2024, Adobe expects net new Annual Recurring Revenues in the Digital Media segment to be $550 million. Subscription revenues of Digital Experience are anticipated between $1.23 billion and $1.25 billion.

Expanding GenAI-Powered Portfolio Aids ADBE’s Prospects

Adobe is riding on the solid momentum in its family of creative, Gen AI models, namely Firefly. It has been used to generate 13 billion images since March 2023 and is seeing rapid adoption by leading brands and enterprises.

Its unveiling of the Firefly Image 2 Model, Firefly Vector Model and Firefly Design Model to mark a significant advancement in its creative Gen AI model family, enhancing creative control, image quality and illustrator capabilities, is a major positive.

Adobe recently introduced the new Firefly Video model, which is a positive. With Firefly innovations and integrations, ADBE has exceeded 12 billion generations since the launch of Firefly. This is marked as an important milestone.

Enhanced AI Assistant to Boost ADBE’s Competitiveness

Adobe enhanced features of Acrobat AI Assistant to allow customers to ask questions, get insights, and create content from information across groups of PDFs and other document types, including Microsoft Word, PowerPoint and text files. It also introduced enhanced meeting transcript capabilities in AI Assistant.

Adobe’s growing efforts to expand content creation in Adobe Acrobat are noteworthy. It integrated Adobe Firefly image generation into its Edit PDF workflows. It has optimized AI Assistant in Acrobat to generate content fit for presentations, emails and other forms of communication.

Adobe also offers the Adobe Express Platform AI Assistant, which is capable of answering technical questions, automating tasks, simulating outcomes and generating audiences seamlessly.

The launch of Generative Remove in Adobe Lightroom, a powerful Firefly-backed tool that helps remove unwanted objects from any photo in a single click in a non-destructive manner, is a plus.

The introduction of Adobe Express for Enterprise, powered by Firefly Image Model 3, is driving the company’s momentum among various enterprises.

Strong Clientele Drives ADBE’s Growth

A solid portfolio and differentiated approach to AI are attracting an expanding universe of customers across Adobe’s segments.

International Business Machines is one of the notable customers leveraging Adobe Firefly.

Adobe’s other key customer wins include Johnson & Johnson, Mayo Clinic, Home Depot, Dentsu, TD Bank, Newell Brands, Alphabet’s Google, MediaMonks, Meta Platforms, U.S. Navy, PepsiCo, Estee Lauder, Disney, RedBull, Amazon, KPMG, U.S. Treasury Department and Charles Schwab.

These factors are expected to drive top-line growth. For the fourth quarter of fiscal 2024, Adobe projects total revenues between $5.50 billion and $5.55 billion.

Adobe expects Digital Media revenues between $4.09 billion and $4.12 billion. The Digital Experience segment’s revenues are expected between $1.36 billion and $1.38 billion.

Adobe expects non-GAAP earnings between $4.63 per share and $4.68 per share.

ADBE’s 2024 Estimate Revision Trend Positive

For 2024, the Zacks Consensus Estimate for earnings is pegged at $18.28 per share, up by a penny over the past 60 days. The figure indicates 13.75% year-over-year growth.

The Zacks Consensus Estimate for 2024 revenues is pegged at $21.44 billion, suggesting 10.46% growth over 2023.

The consensus mark for fourth-quarter fiscal 2024 earnings is currently pegged at $4.66 per share, unchanged over the past 60 days. The figure suggests 9.13% year-over-year growth.

The consensus mark for fourth-quarter 2024 revenues is pegged at $5.54 billion, suggesting 9.71% year-over-year growth.

Adobe Inc. price-consensus-chart | Adobe Inc. Quote

ADBE Stock Trades at a Premium

However, Adobe stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales, ADBE is trading at 9.27X, higher than the industry’s 7.86X.

Conclusion

Adobe’s deepening GenAI focus and innovative GenAI-powered portfolio presents a compelling opportunity for investors. We believe ADBE’s strong growth prospect justifies its premium valuation.

ADBE currently has a Zacks Rank #2 (Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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NVIDIA Corp. continues to dominate the artificial intelligence landscape, with CNBC’s Jim Cramer and Wall Street analysts reinforcing their bullish outlook following the company’s stellar third-quarter earnings report.

What Happened: “The demand is accelerating because the payoff is so great,” Cramer said on Thursday, citing CEO Jensen Huang‘s assertion that customers earn five dollars for every dollar invested in Nvidia chips.

This compelling return on investment, Cramer argues, makes Nvidia’s products essential for major tech companies. “That means they have no choice but to buy Nvidia's chips,” he said.

The sentiment is echoed by Wedbush‘s Dan Ives, who called the results a “jaw-dropper.” Ives predicts the Nasdaq could surge to 25,000, driven by an extraordinary multiplier effect where “one dollar spent on GPU chips translates to an $8 to $10 impact across the tech sector.”

See Also: Bitcoin Analyst Warns Of ‘4-6 Flash Crashes’ Before Year-End As It Inches Closer To $100K

Why It Matters: Nvidia reported third-quarter revenue of $35.1 billion, up 94% year-over-year, with Data Center revenue alone reaching $30.8 billion. The company’s CFO Colette Kress projects gross margins will temporarily dip to the low 70% range as the new Blackwell systems ramp up production.

Rosenblatt analyst Hans Mosesmann maintained a Buy rating while raising the price target from $200 to $220.

This optimism is reflected in a recent Benzinga poll, where 48% of respondents believed Nvidia would continue to dominate the “Magnificent Seven” stocks in 2025, followed by Tesla Inc. at 27%.

Huang describes this period as “the beginnings of two fundamental shifts in computing,” highlighting the transition to machine learning and AI’s emergence as an industrial capability. The company projects fourth-quarter revenue of $37.5 billion, with Oracle Corp. already planning AI computing clusters scaling to over 131,000 Blackwell GPUs.

Price Action: Nvidia’s stock has surged more than 196% year-to-date, significantly outperforming the broader market and its “Magnificent Seven” peers, including Apple Inc. at 23.3% and Microsoft Corp. at 11.4%, according to data from Benzinga Pro.

Read Next:

• November Small-Cap Surge Could Carry Into December’s Santa Rally, Historical Trends Suggest

Image Via Flickr

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Dividend stocks are shares of companies that pay out a portion of their earnings to shareholders as dividends. Companies that increase their dividends over time are especially appealing to retirees and income-focused investors.

Midstream energy companies Enterprise Products Partners and Enbridge have proven to be credible dividend stocks - not only by paying a high yield, but also by consistently increasing dividends. Enterprise has a forward dividend yield of 6.6%, while Enbridge offers 6.1%, compared to the energy sector average of about 4.2%.

Both companies have earned the title of Dividend Aristocrats, which is given to S&P 500 Index companies that have increased their dividends for at least 25 consecutive years. These stocks are sought-after by investors because a company that pays and consistently increases dividends typically indicates strong cash flow, profitability, and sound management.

While these mature companies have moderate growth potential, they are better suited to investors seeking consistent income and exposure to the energy infrastructure sub-sector.

Dividend Stock No 1: Enterprise Products Partners

Enterprise Products Partners has long been a favorite among income-focused investors due to its high and consistent distribution yield. With its vast portfolio of pipelines, storage facilities, and processing plants, EPD plays a critical role in transporting and storing oil, natural gas (NGF25), and petrochemical products.

So far this year, EPD shares have gained 22.8%, compared to the S&P 500's gain of 24.7%.

EPD manages more than 50,000 miles of pipelines and nearly 300 million barrels of storage capacity for natural gas liquids (NGLs), crude oil (CLF25), petrochemicals, and refined products. The majority of EPD's revenue comes from fee-based contracts, which ensure predictable cash flows and allow the company to pay consistent dividends.

In the third quarter, distributable cash flow (DCF) increased 5% to $2 billion. Net income also rose 8% to $0.65 per share. Consistent growth in earnings and cash flows also allowed the company to increase its quarterly dividend by 5.0% to $0.525 per share in the third quarter. The company has been increasing dividends for the past 27 years.

As a master limited partnership (MLP), EPD’s forward dividend payout ratio is relatively high, but sustainable. Analysts predict EPD’s earnings could increase by 6% in 2024, followed by another 6.8% in 2025.

The company also generated an adjusted free cash flow of $943 million. A hefty free cash flow balance should also help the company reduce its debt, as its debt-to-equity ratio is quite high at 1.09.

Overall, Wall Street considers EPD stock to be a "strong buy." Out of the 15 analysts who cover EPD, 12 recommend a "strong buy," one says it’s a “moderate buy,” and two recommend a "hold." The average price target of $33.94 set by analysts represents a potential 5% increase from current levels. Its high target price of $37 suggests the stock could climb by another 14.4% over the next 12 months.

Dividend Stock No 2: Enbridge

Enbridge , one of North America's leading energy infrastructure companies, has long been a favorite of dividend-oriented investors. Aside from pipelines, its diverse portfolio includes natural gas utilities, storage facilities, and renewable energy projects. The company generates predictable cash flows due to its fee-based business model, which isn’t heavily exposed to volatile commodity prices.

ENB stock has gained 20.7% year-to-date, compared to the overall market.

In the third quarter, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased by 8% year on year to $4.2 billion. The company's distributable cash flow (DCF), which it uses to pay dividends, stood at $2.6 billion, the same as the previous year. However, adjusted earnings per share were lower at $0.55, compared to $0.62 in Q3 2023.

For the full year 2024, Enbridge intends to achieve the high end of its EBITDA target of $17.7 billion to $18.3 billion. DCF could fall in the $5.40 to $5.80 range per share.

Enbridge has made several strategic acquisitions to improve its natural gas transmission and storage capabilities, thereby strengthening its market position. Recently, the company completed the acquisition of three U.S. natural gas utilities announced in September last year.

CEO Greg Ebel believes these three are an excellent fit for “Enbridge's existing low-risk business model, offer reliable cash flow, and come with embedded quick-cycle growth opportunities.”

It also completed the acquisition of Public Service Company of North Carolina from Dominion Energy for $3.2 billion. Furthermore, it has collaborated with Microsoft to use artificial intelligence (AI) to "drive significant advancements in safety, emissions reduction, and asset optimization across its operations."

While these acquisitions and investments will increase future earnings and dividends, they also contribute to high debt levels. Its debt-to-equity ratio is high at 1.39, indicating that the company relies heavily on debt to fund its operations. However, its interest coverage ratio of 3.07 indicates that the company can repay the interest on its debts. Analysts predict a 3.4% drop in earnings in 2024, followed by an 8.6% increase in 2025.

For long-term investors, Enbridge offers a mix of income stability and moderate growth potential. Enbridge has increased its dividends for the past 29 years, though its elevated payout ratio is worth noting.

Overall, Wall Street has rated Enbridge stock a "moderate buy.” Of the 16 analysts in coverage, five recommend a "strong buy,” two rate it a "moderate buy,” eight say it’s a “hold,” and one rates it a “strong sell.” Enbridge stock has surpassed its average analyst target price of $42.76. Its Street-high price estimate of $48.45 implies an upside potential of 11.4% from current levels.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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