Could Unity Software Become the Next Apple?

Unity Software ( U 0.83% ) stock has shot up impressively since Meta Platforms( FB 1.39% ) announcement in October 2021 that it would be betting big on the metaverse, a three-dimensional virtual world where people would be able to learn, play, socialize, and collaborate in real-time.

Shares of Unity jumped 35% in the space of just three weeks following Meta’s announcement on Oct. 28, 2021, before a sell-off in tech stocks threw its hot rally out of gear. However, savvy investors should focus on the bigger picture. Unity could win big from the metaverse, since it provides a platform for creating and operating interactive, real-time 3D content.

Man wearing a virtual reality headset.

Image source: Getty Images

It wouldn’t be surprising to see Unity become the Apple ( AAPL 1.30% ) of the metaverse world in the long run. That’s because Unity provides a critical product that could help the metaverse take off, and it enjoys a dominant position in a lucrative metaverse niche already. These traits can be considered similar to Apple, which controls a nice chunk of the global smartphone market and is driving the adoption of 5G smartphones thanks to its huge installed base.

It is worth noting that Unity stock has outperformed Apple since going public despite the volatility experienced by the former.

U Chart

U data by YCharts

But will Unity stock be able to appreciate at a faster pace than Apple in the long run and become a tech giant like the iPhone maker? Let’s find out.

Unity is expected to grow at a faster pace than Apple

Unity Software reported its 2021 financial results on Feb. 3, revealing a huge jump in its top line. The company’s revenue was up 44% during the year to $1.1 billion. Even better, Unity expects its top line to increase 35% in 2022 at the midpoint of its guidance range, indicating that its momentum is here to stay.

Apple, on the other hand, finished fiscal 2021 (for the twelve months ending on Sept. 25, 2021) with a 33% increase in revenue. However, the tech titan’s revenue in the first quarter of fiscal 2022 (for the three months ending on Dec. 25, 2021) increased at a slower pace of 11%. Apple’s slower growth last quarter can be attributed to supply chain constraints, but a closer look at…