AI-Powered Metaverse Applications Propelled Tech Stocks in 2023

The metaverse’s integration with another transformative technology, AI, boosted the performance of tech stocks in 2023. Marcus Weyerer, Senior ETF Investment Strategist, EMEA, for Franklin Templeton ETFs, delves into the industrial and consumer applications of the metaverse, the role of AI in enhancing these experiences, and the significant growth potential and investment opportunities this virtual world holds.

Key takeaways:

  • Last year, artificial intelligence (AI) and metaverse-related stocks outperformed the broad technology sector by double digits.
  • The Application Software and Interactive Media sub-industries were the main drivers behind the 71% performance of the Solactive Global Metaverse Innovation Index in 2023.
  • Applications span a vast spectrum of use cases, from entertainment and retail to government and military.
  • AI has emerged as a key technology that is improving, and in some cases transforming, the metaverse user experience.

The metaverse provides a decentralized, blockchain-based virtual realm in which users can engage in immersive social, work, business and leisure experiences. In recent years, major corporations have embraced the metaverse to enhance efficiency in planning and manufacturing operations. For instance, leading German automaker BMW is leveraging NVIDIA’s Omniverse to simulate factory setups well before actual production commences. This proactive approach enables the company to detect and address issues as well as streamline processes and mitigate inefficiencies—ultimately saving real-world costs. Industrial metaverse usage may lack the glitz and entertainment of the consumer metaverse, which can feature leisure activities such as virtual beachside cafe get-togethers. But industrial use is projected to contribute significantly to the overall growth of the metaverse market, which could approach US$500 billion by the end of the decade.1