Blockchain has emerged as one of the most disruptive forces in the technology sector. However, while several people still prefer to invest via the cryptocurrency market, there are better options for those inclined to stocks.
Graphics processing unit manufacturer Nvidia Corp. (NASDAQ:NVDA) has been the preference for those looking to invest in the massive adoption of blockchain technology. The company’s stock has surged nearly 700% over the last three years amid an increase in demand for its GPUs.
This growth can be significantly attributed to the rapid growth of the cryptocurrency market, which peaked toward the end of 2017 and again this year. Cryptocurrency mining companies use Nvidia’s GPUs to mine bitcoins and other digital currencies. The company’s graphics processing technology is tipped to experience exponential growth in the coming years as mining activity increases.
Potential alternatives to Nvidia
Nvidia is not the only big tech company looking to invest in blockchain. Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN) and International Business Machines Corp. (NYSE:IBM) have also invested heavily in blockchain. For those looking to invest in single stocks with some focus on blockchain, these three should be on the list of potential picks.
Another option would be to target asset managers that specialize in blockchain and cryptocurrency assets. In this case, Mike Novogratz’s Galaxy Digital Holdings Ltd. (TSX:GLXY), which was founded just two years ago, comes close. The financial services company specializes in blockchain and cryptocurrency assets. It has grown to a market value of more than 550 million Canadian dollars ($423.3 million). This illustrates the growing appetite for blockchain asset managers.
The market has attracted companies from across the globe, including several that are privately held. South Korea’s Hashed is another example. The Seoul-based firm has managed to grow its blockchain assets under management from $0.6 million in 2016 to more than $90 million net of fees. The company has taken an expansive approach to the market by combining blockchain advisory services with asset management. This gives it access to a wider market that includes project research and development for early-stage blockchain companies.
Why Nvidia stands out
All these could be potential alternatives to Nvidia for those looking to build a portfolio of diversified blockchain investments. However, Nvidia offers its own kind of diversification in the sense that its business covers other markets, including gaming, artificial intelligence and autonomous vehicles.
The gaming industry, in particular, is expected to continue to evolve in the coming years, thereby boosting growth. Artificial intelligence and autonomous vehicles are still at very early stages of growth, which means there could be huge opportunities for the company.
One key advantage that Nvidia has over other technology stocks looking to benefit from blockchain technology is that it does not have to create something new. Before companies started to use its hardware to mine bitcoins, Nvidia was selling to gaming companies and other tech companies.
Microsoft’s direct link to blockchain technology is based on its Azure cloud service. The platform is built on the Ethereum network. As more companies embrace blockchain, the more they are likely to choose Azure for security reasons. But Amazon is doing the same with its web services platform.
In fact, Amazon has gone a step further to create an infrastructure for startups to build blockchain projects. For this reason, it could be the closest rival to Nvidia. Its expansive portfolio of services also creates avenues to expand its investment in blockchain. But again, there are several competing platforms that startups can use to build a blockchain project.
Nvidia’s GPUs, on the other hand, do not appear to have much of a challenge when it comes to mining cryptocurrencies. Advanced Micro Devices Inc.’s (NASDAQ:AMD) Radeon RX series is perhaps the likely candidate to rival Nvidia’s GeForce RTX series in the near future.
Conclusion
In summary, it looks like Nvidia’s position in the blockchain market is stronger than any of its close rivals. The company’s product has gained so much popularity in the cryptocurrency mining space that it barely needs to market it. It is a self-seller. This is not the case for other big technology companies looking to capitalize on the adoption of blockchain technology.
Disclosure: No positions in the stocks mentioned.
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About the author:
Nicholas Kitonyi
Nicholas is the founder of CAGR Value. He is a financial analyst with extensive experience in investment research and stock market analysis. His analysis has been featured on several research sites.
Nicholas has solid knowledge of both U.S. and European markets. His investment style is focused on undervalued plays and growth stocks. Nicholas classifies himself as a swing trader and likes to trade GBP/USD, gold and FTSE 100, among other liquid instruments.