The rapid evolution of the metaverse has been significantly accelerated by the advent of social media and mobile internet platforms. With over 2.4 billion users on Meta (formerly known as Facebook) and billions more actively engaging on WhatsApp and YouTube, the digital realm is now more interconnected than ever. This increasing connectivity has blurred the lines between our digital and physical lives, as daily activitieswhether socializing, entertainment, or shoppingare increasingly being conducted in early metaverse environments.

This growing trend has paved the way for the development of innovative tools for virtual learning, collaborative workplace environments, and blockchain-driven gaming economies. According to a report by NewGenApps, the number of players engaging in virtual reality (VR) and augmented reality (AR) gaming is projected to soar to an impressive 216 million worldwide by the year 2025, creating a market valued at $11.6 billion. Notably, a survey conducted in 2024 found that 34% of game developers globally are currently developing titles for the Meta Quest Store, a digital marketplace, signaling a robust interest in immersive gaming platforms.

In 2024, the global video streaming marketa vital component of immersive mediawas valued at $674.25 billion. Meanwhile, a report from the Business Research Company forecasts that the global metaverse market will expand from $227.05 billion in 2024 to $316.34 billion in 2025, boasting an impressive compound annual growth rate (CAGR) of 39.3%. In contrast, S&P Global Market Intelligence predicts that global metaverse revenue will rise from $17.5 billion in 2023 to $54.5 billion by 2028, reflecting a steady growth rate of 25.5% CAGR. A significant driver of this growth is the increased involvement of businesses, which have emerged as the primary customer segment due to the growing demand for digital twin software and remote collaboration tools. According to S&P, businesses solidified their presence in the metaverse market, constituting 42.8% of the total in 2023. This expansion of virtual platforms and the adoption of expedited streaming services are continuously enhancing metaverse capabilities across various industries.

The growth of the metaverse is largely fueled by the integration of content streaming and blockchain infrastructure. Blockchain technology has played a crucial role in enhancing secure transactions, improving digital asset ownership, and facilitating governance within these digital spaces. These advancements support user-driven economies, allowing individuals to create, sell, and profit from their digital experiences, much like the popular gaming platform Roblox. Concurrently, the development of 3D platforms, virtual marketplaces, and gaming realms has spurred increased investment.

Positioned as a burgeoning sector within the video games industry, the metaverse represents a rapidly evolving digital landscape where immersive technology crafts interactive virtual worlds. This expansive environment is built upon virtual reality (VR), augmented reality (AR), blockchain technology, and mixed reality, ultimately offering simulated spaces for social interaction, work, education, and play. The metaverse effectively intertwines digital and physical realities, providing tailored and immersive experiences through the use of avatars, real-time communication, and spatial computing. Users are no longer passive consumers of static web pages; they now traverse dynamic 3D environments that enhance and replicate real-world interactions, marking a significant shift from conventional applications to fully immersive virtual experiences. The metaverse can be categorized into four distinct types: lifelogging, augmented reality, mirror world, and virtual reality.

Earlier, we published a comprehensive list of 12 Best Metaverse Stocks to Invest In. In this article, we will focus on Adobe Inc. (NASDAQ:ADBE) and evaluate its position against other top contenders in the metaverse investment landscape.

Generative AI is poised to redefine the next phase of the metaverse. It offers a range of functionalities including personalized content recommendations, auto-dubbing, advanced editing, and enhanced visual outputs. Leading streaming platforms are increasingly leveraging large language models such as GPT-4 to generate real-time content while ensuring effective moderation, thereby making digital interactions safer and more user-friendly. While the broader concept of the metaverse is still evolving, certain technologies that underpin virtual economieslike play-to-earn gaming models, NFT marketplaces, and digital ticketing for eventsare already generating income opportunities for both users and developers. The Entertainment Software Association has reported that an impressive 227 million Americans engage in video gaming on a weekly basis, with an average player age of 31, indicating a widespread acceptance of immersive content across diverse age demographics. The synergy between AI and VR/AR technologies is facilitating expansion into areas beyond gaming and entertainment, including healthcare and business applications.

As users increasingly seek out personalized, high-resolution experiences, advancements in metaverse technology are progressing towards low-latency infrastructures. Innovative platforms like hesp.live are transforming streaming capabilities, providing rapid delivery for applications in gaming, education, and live shopping. Initially, the metaverse faced considerable criticism due to a less-than-ideal user experience and challenges in engaging audiences. Despite a decline in public excitement after 2022, significant progress has continuedreflecting that the metaverse is still in its infancy, with ongoing enhancements driving its development. These advancements, coupled with the rising demand for video-on-demand services, illustrate how intrinsically the metaverse integrates into contemporary digital viewing habits. North America remains the dominant market, bolstered by major players and substantial digital spending, while the Asia Pacific region is poised for future growth, fueled by rapid adoption of immersive technologies.

This evolution signals that the metaverse is not merely a transient trend; it represents a fundamental transformation in how individuals interact and connect within digital spaces. As these immersive environments begin to disrupt traditional media, the metaverse emerges as an exciting and viable investment opportunity.

To compile our list of the 12 Best Metaverse Stocks to Invest In, we undertook meticulous research to identify companies with considerable exposure to metaverse technology. Our approach involved using stock screeners, ETFs, and online rankings to create a preliminary list of relevant companies. We then analyzed the number of hedge fund holders investing in these companies as of Q4 2024, utilizing insights from Insider Monkeys hedge fund database. The finalists were selected based on the highest levels of interest from hedge funds.

What makes these hedge fund favorites particularly intriguing is their potential to outperform the market. Our research indicates that mirroring the top stock selections of elite hedge funds can yield superior returns. Our quarterly newsletter employs a strategy that identifies 14 small-cap and large-cap stocks every quarter, achieving an impressive 373.4% return since May 2014, outpacing its benchmark by 218 percentage points.

So, is Adobe Inc. (ADBE) the best metaverse stock to invest in? Lets delve deeper into this question.

Adobe Inc. (NASDAQ:ADBE) operates within the realms of digital creativity, customer experience, and publishing through three primary segments: Digital Media, Digital Experience, and Publishing & Advertising. The companys Creative Cloud and Document Cloud platforms empower creators and enterprises to design content across multiple formats. Adobe Aero, the companys flagship AR platform, allows designers to create, collaborate, and publish interactive experiences grounded in real-world environments. This positions Adobe Inc. (NASDAQ:ADBE) as a frontrunner in the development of immersive content, thereby reinforcing its stature within the AR digital experience landscape.

For the quarter concluding on February 28, 2025, Adobe Inc. (NASDAQ:ADBE) achieved a record revenue of $5.71 billiona remarkable 10% increase compared to the previous year. The company reported a GAAP net income of $1.81 billion, with a non-GAAP net income reaching $2.22 billion. Furthermore, Adobes operating cash flow was a robust $2.48 billion. The Digital Media segment alone generated $4.23 billion, reflecting an annual recurring revenue (ARR) of $17.63 billion, which represents a 12.6% growth over the preceding year. Conclusively, Adobe ended the quarter with $19.69 billion in future obligations while having repurchased 7 million shares, thereby solidifying its position on our list of the best metaverse stocks.

Addendum: The revenue from Business Professionals and Consumers subscriptions surged by 15% to reach $1.53 billion, while the revenue from Creative and Marketing Professionals increased by 10% year-over-year to reach $3.92 billion. In addition, the Digital Experience segment contributed another $1.41 billion, with subscription revenue growing 11%. Adobe's innovative advancements in AI concluded the quarter with over $125 million in ARR, reflecting the strong demand for the companys generative toolset.

Adobe is maintaining a favorable outlook for its fiscal year 2025, forecasting revenue of $23.55 billion, with non-GAAP earnings per share projected to range between $20.20 and $20.50, and revenue expectations hitting $5.82 billion. Despite prevailing economic challenges, Adobe Inc. (NASDAQ:ADBE) remains optimistic about its diversified approach, robust cash generation capabilities, and pioneering AR and AI products.

Overall, ADBE ranks fifth on our list of best metaverse stocks to invest in. While recognizing the potential that ADBE presents, our perspective is that certain AI stocks may offer even greater promise for delivering higher returns in a shorter timeframe. There is a particular AI stock that has shown gains since the start of 2025, while many popular AI stocks have declined by approximately 25%. If you are seeking an AI stock with more promise than ADBE that trades at under five times its earnings, be sure to check out our report on this undervalued AI stock.

For further insights, read our articles on the 20 Best AI Stocks To Buy Now and the 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article was originally published on Insider Monkey.