Video game stocks are the new momentum plays

Video game stocks are the new momentum plays

Amazon wasn't the only technology stock to outshine the broader market for tech shares throughout the last 3 months.

Investors likewise struck the 'play' button on shares of companies that get all or the majority of their profits from the computer-games company.

Sony (SNE), Activision Blizzard (ATVI), Electronic Arts (EA) and NetEase all published market-trouncing returns for the 2nd quarter, a period when the Nasdaq was essentially flat.

Did shares of Nvidia (NVDA), whose graphics chips are utilized in effective computer systems favored by players.

The question now for momentum investors is how far the stocks can run, as these issues tend to be unstable.

Sony, for example, raised from $20 a share to over $30 last year before diving back to $20 this year.

Still, for investors who can swallow such swings, their current momentum is worth an appearance.

Wall Street expects all five of these companies to post healthy income development during their present fiscal years (See table below.).

The popularity of video gaming has actually grown so great that it's generated professional leagues and TELEVISION networks committed to revealing their contests.

At the same time, the proliferation of consumer game platforms from mobile phones to home-media consoles to virtual-reality headsets is generating an explosion of new titles.

As normal, momentum financiers want in on the action.

Activision Blizzard and Electronic Arts, two of the biggest game developers by market cap, saw their stocks surge 17% and 14.5%, respectively, throughout the second quarter.

Nvidia shares jumped 32% while China-based NetEase, which hosts online games and other consumer Internet services, acquired the most with a 35% rise.

Sony rose 14% after it reported a full-year earnings in April, reversing 2 years of losses, thanks to sales of more than 17 million units of its most current video game console, the PlayStation4.

This bullishness came during a quarter when the majority of the biggest big-cap tech names saw their shares fall. The surge means these businesses are now among the 50-most important tech companies to trade in U.S. markets.

The optimism for video gaming stocks also extended into Europe.

That's where shares of France-based Ubisoft Entertainment leapt 17% on the Paris exchange in the 2nd quarter.

The international games business is like Hollywood, in that it's hit-and-miss, which helps discuss the volatility of these stocks.

While NetEase shares gained the most in the 2nd quarter, for instance, they began 2016 with a 25% plunge.

However for aggressive financiers disciplined enough to purchase on dips and take earnings on price surges, there's a case to be made for computer-game stocks.

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