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Microsoft, Adobe Will Benefit from Metaverse, Bernstein Says

Microsoft already has 'almost all of the major capabilities required to deliver a metaverse platform,' the firm said.
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Microsoft  (MSFT) - Get Microsoft Corporation Report, Adobe  (ADBE) - Get Adobe Inc. Report and Salesforce  (CRM) - Get, inc. Report are poised to take advantage of the metaverse, says investment management/research firm Bernstein.

The metaverse, of course, refers to alternate digital reality, the latest rage in the technology world. Bernstein chose the three companies from its cloud and software sector coverage.

Microsoft is “best positioned to be a big winner from the metaverse, … having almost all of the major capabilities required to deliver a metaverse platform today,” Bernstein analyst Mark Moerdler wrote in a commentary cited by CNBC.

He pointed to the company’s smart glasses unit HoloLens, its Mixed Reality headset, its business communications platform Microsoft Teams and LinkedIn.

As for Adobe, its Creative Cloud suite of applications for video editing, web development, etc. has tools and and content creators for the metaverse, Moerdler said.

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“Creative Cloud is all about creating content, and the metaverse will be all about consuming content,” he said. “More and different types of content creators will be required.”

Salesforce could benefit from digital marketing and e-commerce in the metaverse, Moerdler said.

Getting back to Microsoft, Morningstar analyst Dan Romanoff assigns it a wide moat and puts fair value at $345. The stock closed Thursday at $304.80, down 4%.

“Microsoft has become one of two public cloud providers that can deliver a wide variety of … solutions at scale,” he wrote in October.

“Additionally, Microsoft embraced the open source movement and has largely transitioned from a traditional perpetual license model to a subscription model. Finally, Microsoft exited the low-growth, low-margin mobile handset business and is driving Gaming to be more cloud-based.”