Take-Two interactive software (NASDAQ: TTWO) stocks have been facing industry headwinds for some time now. However, from the beginning of the year to the present, TTWO shares are showing great recovery, increased by more than 21%. Despite the rally, TTWO’s stock isn’t overpriced, trading just over 21 times earnings, but still well below the leisure goods industry average of about 24.9 times. . Take Two grand theft auto (GTA) Release Timing Play or GTA and 2 Hit Wonders (pardon the pun) red dead redemption As for franchising, I see it as a worthy long-term option. Therefore, I am bullish on TTWO.
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At this time, it is difficult to predict when consumers will be willing to spend big on entertainment products. My guess is that the pandemic-era boom in stay-at-home consumption is over. Either way, I expect Take-Two to continue to invest in content in his pipeline.
Management wants to prove that Take-Two is more than just a two-hit wonder. Zynga’s massive acquisition, completed last year, is a step in the right direction as the company looks to leverage mobile gaming for growth.
While this huge deal didn’t pay off right away, I see Zynga as a great diversifier that makes the wait for the company’s blockbuster titles a little more bearable.
Take-Two Interactive: What is your take on AI?
The GTA series video game maker will report earnings after the close of trading today, so the stock could move wildly in either direction. Nevertheless, I wouldn’t expect Take-Two to follow in the footsteps of many other companies that have abused the acronym. “AI” (artificial intelligence) To show that it is on the right side of an innovative trend. In many ways, AI has become a sort of “gathering fuel” for nearly every company.
Even fast food giant Wendy’s (Nasdaq: Wen) plans to use an AI chatbot to assist with drive-thru ordering, showing that it embraces AI with open arms. Of all the companies I thought would make a big splash in his AI space, Wendy’s was probably at or near the bottom of the list. These days, every company has much to gain (and not much to lose) by adopting new AI technologies.
I don’t think the word “AI” will be overused on the Take-Two conference call, but I certainly wouldn’t be surprised if the topic was briefly brought up.it’s hard to escape from Chat GPT After all, the hype.
Earlier this year, Take-Two CEO Strauss Zelnick commented on the rise of AI and ChatGPT. For now, at least not yet, Zelnick doesn’t look like he’s jumping on the AI bandwagon. He doesn’t expect AI to impact the company’s cost structure anytime soon. He also dismissed the notion that AI could create a better competitor to GTA.
Take-Two may not have big chatbot ambitions right now, but in the future Take-Two will embrace AI tools to take large open-world titles like GTA to the next level. I wouldn’t be too surprised if it did.
If Wendy’s can get investors excited about AI (the stock is up more than 16% since its March low), I’m sure Take-Two, a company with a lot of tech talent, can do the same. Generative AI, in particular, can help us build bigger and better worlds.
Nevertheless, only time will tell how an AI-driven future will affect video game companies. For now, it’s safe to say that Take-Two’s economic moat will remain intact, even if AI is introduced into the next generation of new games.
Take-Two Stock: Recession risk seems excessive
Take-Two may be viewed more as a leisure products company, but I see it as a technology company that has room to operate once the industry headwinds are gone. At 41% below its all-time high, Take-Two has probably already fully priced in the risk of a recession. Video game companies may actually turn out to be more resilient in the face of a possible recession.
After all, video games aren’t that much of an expense when you think of them on a dollar-per-hour basis for entertainment. In that regard, video games actually offer great value to consumers.
Furthermore, I believe that a title like GTA can be hugely successful at any point in the business cycle in which the title is finally released. As long as the game lives up to the hype, it will probably sell.
Is TTWO Stock a Buy, According to Analysts?
Turning to Wall Street, TTWO stock is a strong buy. Over the last three months, he has been rated 9 Buy and 3 Hold by 12 analysts.of Take-Two Interactive Average Target Price is at $134.00, suggesting a 6.9% upside potential. Analyst price targets range from a low of $105.00 to a high of $154.00 per share.
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Conclusion
Take-Two appears to be pushing ahead with its title development despite the ongoing economic headwinds. For now, the head of Take-Two doesn’t expect AI to be a game changer (pardon the pun). However, in a few years, perhaps the company may reconsider it. Considering these factors, combined with an attractive valuation, the TTWO stock looks attractive.