Tech Investing: No Matter Who Loses This Silicon Valley Battle… You'll Win

Michael A. Robinson

It's becoming one of the biggest battles in high tech today: In one corner is the world's largest software company, and in the other is a global entertainment and electronics giant.

Of course, I'm talking about the growing rivalry between the Xbox One from Microsoft Corp. (Nasdaq: MSFT) and PlayStation 4 from Sony Corp. (NYSE ADR: SN).

Last week, Microsoft said it sold 2 million Xbox One consoles in this year's first quarter. That brings total worldwide sales to about 5 million units in roughly three short months.

However, Sony now appears to have the sales lead. Over roughly the same period, it sold nearly 7 million of its PlayStation 4s.

Gamers and industry analysts alike are parsing all sorts of stats – like total sales to stores vs. actual players – to say one platform or the other is truly ahead.

But we've found a way to make money no matter which entrant ultimately becomes the top seller. And it's about as close to a "sure thing" as you'll find in tech investing.

In fact, shares of the mid-cap tech firm we're going to tell you about today could easily double from here – and for one simple reason.

This company supplies components that are critical to both gaming systems.

Gaming the System

Honestly, the term "gaming" may be something of a misnomer. This is actually a very serious industry.

Roughly two-thirds of all U.S. households play video games, according to data from the Entertainment Software Association trade group.

And tech researcher Gartner estimated the global video game market jumped from $79 billion in 2012 to $93 billion in 2013 – a surge of 18%. Gartner is forecasting sales will reach $111 billion by the end of 2015, which works out to a four-year sales gain of 40%.

In January, research firm DFC Intelligence said the gaming sector was doing even better than it expected, thanks to an increasing "crossover" between gaming systems and PCs.

DFC analyst Jeremy Miller has said that "core gamers seem to be willing to spend more money than ever." And while Asia remains a big contributor to the market, DFC found that core PC gameplay in Western markets did increase, in fact, last year – and will fuel big gains in 2014.

Said Miller: "We actually think the launch of the new console systems will help lift the PC game business because there is large overlap between console and PC gamers."

Clearly, the success of Xbox and PlayStation is important for both the industry and for tech investors. But finding a firm that supplies both gives you strong odds of a victory.

And we found a firm that does just that.

Michael A. Robinson

About the Author

Browse Michael's articles | View Michael's research services

Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.

As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.

In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.

You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.

… Read full bio