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Blockchain has emerged as one of the most disruptive forces in the tech industry. However, while many people still prefer to invest via the cryptocurrency market, there are better options for those who are inclined to shares.
Graphics processing unit maker 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 risen nearly 700% over the past three years due to increased demand for its GPUs.
This growth can be attributed significantly to the rapid growth of the cryptocurrency market, which peaked towards the end of 2017 and again this year. Cryptocurrency mining companies use Nvidia’s GPUs to mine bitcoin and other digital currencies. The company’s graphics processing technology is set to experience exponential growth in the coming years as mining activity increases.
Potential alternatives to Nvidia
Nvidia isn’t 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 the blockchain. For those looking to invest in single stocks with a bit of a blockchain focus, these three should be on the list of potential choices.
Another option would be to target asset managers who specialize in blockchain and cryptocurrency assets. In this case, Mike Novogratz’s Galaxy Digital Holdings Ltd. (TSX: GLXY), founded just two years ago, is getting closer. The financial services firm 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 all over the world, including many privately owned. South Korean hashed is another example. The Seoul-based company managed to grow its blockchain assets under management from $ 0.6 million in 2016 to over $ 90 million after fees. The company has taken an expansive approach to the market by combining blockchain consulting services with asset management. This gives it access to a broader market that includes research and development of projects for early stage blockchain companies.
Why Nvidia stands out
All of these could be potential alternatives to Nvidia for those looking to build a diversified blockchain investment portfolio. However, Nvidia offers its own kind of diversification, meaning 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, thus spurring growth. Artificial intelligence and autonomous vehicles are still in the early stages of growth, which means there could be huge opportunities for the company.
A key advantage Nvidia has over other tech stocks looking to benefit from blockchain technology is that it doesn’t have to create something new. Before companies started using their own hardware to mine bitcoins, Nvidia was selling to gaming companies and other tech companies.
Microsoft’s direct link to blockchain technology relies on its Azure cloud service. The platform is built on the Ethereum network. As more companies adopt blockchain, the more likely they are 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 may be Nvidia’s closest rival. Its broad portfolio of services also creates avenues for expanding its blockchain investments. But again, there are several competing platforms that startups can use to build a blockchain project.
Nvidia’s GPUs, on the other hand, don’t seem to have many challenges when it comes to mining cryptocurrencies. Advanced Micro Devices Inc. (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 appears that Nvidia’s position in the blockchain market is stronger than all of its close rivals. The company’s product has gained so much popularity in the cryptocurrency mining space that it hardly needs to commercialize it. He is a self-seller. This is not the case with other large tech companies looking to capitalize on the adoption of blockchain technology.
Disclosure: No position in the actions 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 was published on several research sites.
Nicholas has a solid understanding of the US and European markets. His investment style is centered around undervalued stocks and growth stocks. Nicholas ranks as a swing trader and enjoys trading GBP / USD, gold and FTSE 100, among other liquid instruments.
Visit Nicholas Kitonyi’s website
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