www.research.hsbc.comDisclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.December 2021By: Davey Jose, Frank Lee, Nicolas Cote-Colisson and Frank He (S1700517120005)The Metaverse AgeInvesting in delivery, infrastructure and contentThere are three major investable areas for the emerging metaverse: delivery (headsets), infrastructure and content We present stocks listed in Asia, Europe and the US that our equity analysts believe could ride the wave of this disruptive technology……and detail the regulatory landscape, ESG implications and our HSBC Disruption FrameworkS P O T L I G H TDisruptive TechnologyEquitiesGlobalThematic research
1Disruptive Technology ● EquitiesDecember 2021Our core belief is virtual and augmented reality technology, which transports users to the world of the metaverse, could become the next mass computing platform like the PC and smartphone before it. But it will take time. We expect Facebook (now Meta Platforms) to be a significant contributor to the metaverse, a bit like Google to the Internet, but it can’t build the metaversealone. What’s needed is a combination of leading hardware and software companies. We don’t see the metaverse being a major part of earnings in the near term, and make no changes to our earnings or forecasts, but we believe it can become a major driver over the long term. In this report we talk through the various metaverse experiences and related technologies (such as quantum computing), explore the regulatory landscape and ESG implications, and detail where the metaverse lies in our HSBC Disruption Framework. But our focus is where to invest:Delivery (p.15 for companies): We list 13 companies that make all the processors, displays, optics and sensors for headsets. These include 12 stocks covered by HSBC analysts, among them Goertek, which makes lenses and display modules for headsets such as Facebook’s Oculus Quest 21, Will Semi, which makes camera sensors, and TSMC, which manufactures the all-important semiconductor chipsInfrastructure (p.16 for companies): We list 12 companies that focus on servers and datacentres, providing the infrastructure to power the metaverse. Our list of profiled companies covered by HSBC analysts includes 7 Buys, among which Hon Hai, which makes equipment for the three large US cloud service providers (Microsoft, Amazon and Google), and SK Hynix.Content (see p.17 for companies): We list 16 companies providing digital content and is the other major investable segment. In terms of the major ecosystem players, among companies covered by HSBC, we look at Meta Platforms (formerly Facebook) as it’s involved in all the key metaverse areas from social media to e-commerce, as well as Tencent, which stands out among other Chinese internet giants for ...
