Reasonable investors can (and do) disagree about what Bitcoin (CCC:BTC-USD) should be worth. Personally, I think the current price above $55,000 is questionable at best and a bubble at worst. Many cryptocurrency bulls, however, see an easy path to six figures and beyond.
Valuation debates aside, though, Bitcoin truly is impressive. The parameters created by the cryptocurrency’s pseudonymous creator, Satoshi Nakamoto, are admittedly brilliant. Honestly, the technology put into mining and other aspects of its ecosystem can at times be almost awe-inspiring.
Simply put, Bitcoin is innovative. Whether that innovation will end up changing the world or fizzle out, however, remains to be seen.
That said, it’s important to remember that innovation can be found in the equity markets as well. In fact, innovation has been a major driver of many U.S. stocks. It’s not a coincidence that the more tech-heavy Nasdaq Composite has significantly outperformed other major indices over the past decade.
Admittedly, there are valuation concerns with stocks at this point, too. Companies with minimal (or in some cases zero) revenue have valuations in the tens of billions of dollars. Multiples of 40 times revenue and over 100 times earnings are not uncommon. So, as with Bitcoin, there’s a debate as to whether investors are wisely putting a premium on potential or simply part of something close to a bubble.
For these eight stocks, the bet is the former. All eight of these companies are as innovative as they come. All eight also have a path to upside. For investors looking for stocks to buy that share the promise of Bitcoin, these are all attractive choices:
- Nvidia (NASDAQ:NVDA)
- Amazon (NASDAQ:AMZN)
- Snowflake (NYSE:SNOW)
- Moderna (NASDAQ:MRNA)
- Align (NASDAQ:ALGN)
- Crowdstrike (NASDAQ:CRWD)
- Quantumscape (NYSE:QS)
- Dmy Technology Group III (NYSE:DMYI)
High-Tech Stocks to Buy: Nvidia (NVDA)
The semiconductor industry powers so much of the innovation that we’ve seen over the past decade. Moreover, it will help power many of the innovations on the way, whether that’s electric vehicles (EVs) and autonomous vehicles (AVs), the Internet of Things (IoT) or artificial intelligence (AI).
Even in such an innovative industry, though, Nvidia seems to lead the way. It has exposure to all of those “megatrends” in a way that other chip companies don’t. NVDA’s dominance in gaming remains unquestioned as well.
Currently at about $520 per share, NVDA stock certainly isn’t cheap. But it shouldn’t be. And after a recent pullback, the stock has now been rangebound for about seven months. Yet the opportunities in front of the company have only seemingly grown.
No high-tech stock is going to be cheap. But if investors are willing to pay up for Bitcoin-like innovation, it’s hard to imagine many better choices than Nvidia.
Amazon’s incredible breadth perhaps obscures just what an innovative company it is. For example, its e-commerce distribution centers are marvels of automation and will only get better. Amazon’s logistical capabilities are practically unmatched. Plus, it’s not much of an exaggeration to say that Amazon Web Services (AWS) powers much of the Internet and the steady march to “the cloud.”
Yet, like NVDA, AMZN stock has stumbled along of late. It’s down about 6% so far this year and off 1.6% over the past six months, underperforming the market in the process.
With earnings growing and the stock price stagnant, valuation is starting to look reasonable. That historically hasn’t been the case for AMZN. Shares now trade at 58 times forward price-earnings, despite projections for next year’s growth at nearly 39%.
Fundamentally, Amazon looks attractive. Meanwhile, the same Bitcoin-inspired, innovation-driven qualitative case holds for this stock. That combination looks like an opportunity.
Next up on this list of innovation-like-Bitcoin stock picks is Snowflake. It says something about Snowflake’s high-tech nature that Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) invested alongside its initial public offering (IPO). This company remains unprofitable and trades at a nosebleed 61.59 times price-sales, yet the ‘Oracle of Omaha’ Warren Buffet provided his imprimatur.
To be sure, Berkshire’s effective price of $120 per share is more than 48% below the current SNOW stock price of $233. And SNOW’s multiples highlight the valuation concerns here.
But this is also a potentially revolutionary company. Its cloud “data warehouse” platform fits in perfectly with the Big Data trend. So, there’s a reason investors of all stripes — including more value-focused operators like Berkshire — were so optimistic toward the IPO.
SNOW stock more than tripled from its IPO price to clear $400. Now, it has since pulled back some 46% from its all-time high. Cheaper doesn’t necessarily mean cheap, but this is one of the best plays in all of software — and one potentially worth paying up for.
At least as Wall Street sees it, MRNA stock appears downright cheap. Shares trade at just 9 times the consensus earnings per share (EPS) estimate for 2022, when sales of the company’s Covid-19 vaccine should be in full swing.
Now, that multiple could be misleading. It does seem like vaccine sales will continue for some time, but hoped-for “herd immunity” could depress demand over time. Plus, there are already other approved vaccines on the market and more on the way.
But it’s important to remember a key fact about Moderna: it was valuable even before the novel coronavirus pandemic arrived. Its IPO in December 2018 was one of the largest for a biotech in history. The company entered 2020 with a market capitalization above $6.5 billion.
That figure admittedly now is $54 billion. But Wall Street sees profit of over $5 billion in 2022 alone. Meanwhile, the company’s success with the Covid-19 vaccine supports optimism toward the rest of its pipeline, which is based on similar mRNA (messengerRNA) technology.
The hope for Moderna before the pandemic was that it would prove to be one of the most innovative biotech companies in the world. Nothing so far has proven otherwise. In that way, MRNA is just as compelling as Bitcoin.
Align literally revolutionized orthodontics. That inventive nature is what lands it on this list of stocks to buy that are better than Bitcoin. It’s just that simple.
But the concern of late has been whether Align can keep its proverbial bite. Competition is increasing from SmileDirectClub (NASDAQ:SDC) and other companies. Moreover, investors have worried that this name’s growth is coming to an end. ALGN stock plunged by more than half between mid-2018 and early last year.
Now, though, investor confidence has recovered and so has Align. And there should be more upside ahead. Yes, the stock is expensive — currently near $533 — but Align still leads the industry. As long as that holds, ALGN can keep rising.
As you probably know, there’s no shortage of innovation in the cybersecurity space. For example, Palo Alto Networks (NYSE:PANW) has led the transition from hardware to cloud-based software. Plus, the likes of Okta (NASDAQ:OKTA) and Zscaler (NASDAQ:ZS) have carved out impressive niches.
But in terms of overall capability, it’s hard to argue with Crowdstrike as an investment. The company’s threat prevention offering is “cloud-native,” removing the need for customers (and providers) to transition from on-premise services. On top of that, acquisitions like the company’s recent purchase of log management startup Humio will only expand its offerings.
CRWD stock isn’t cheap. In fact, it’s one of the more expensive names in the market. But a nearly 22% pullback from last month’s high of $251.28 does at least make the stock more affordable. Plus, Wall Street analysts still see upside.
This has been a market where growth is prized over valuation. As long as that trend holds, CRWD stock should be a winner and stack up against innovative names like Bitcoin.
The core catch with QS stock is that maybe it shouldn’t be on this list of stocks that are better than Bitcoin. Of course, Quantumscape says it is one of the most innovative companies out there, working to develop solid-state batteries for EVs. Those batteries would be a massive improvement over current lithium-ion products in terms of power, charging speed and safety.
But the one question is how, exactly, is Quantumccape doing this. Researchers have failed for years to solve significant challenges with lithium-metal batteries like the ones being developed by QS. And, so far, Quantumscape has been relatively tight-lipped about its approach to those challenges.
In December, however, the company did release data that shows substantial improvement over existing batteries across a range of measures. And, as managers of a public company, Quantumscape executives would be taking massive financial and legal risk in presenting data that wasn’t completely on point.
Simply put, if the company can do what it claims, QS stock has enormous potential as the EV revolution plays out. And with the stock down by more than half from (admittedly bubbly) highs, investors can get exposure to that potential at a cheaper price.
Dmy Technology Group III (DMYI)
Last up on this list of stocks better than Bitcoin is DMYI stock. To be clear, Dmy Technology Group III isn’t really an innovator itself. It’s actually a special purpose acquisition company (SPAC).
However, it’s merging with quantum computing startup IonQ in a deal valued at $2 billion. IonQ is still in its early stages, but it has an intriguing value proposition. The company’s quantum computing device will be about the size of a video-game console, while running on cloud platforms like AWS.
To be frank, there is no shortage of risks here. For example, the SPAC structure is more dilutive than some investors realize. As such, the entire group has seen dimmed enthusiasm of late. And DMYI stock itself faded after the deal was made official, which suggests the market isn’t quite as excited as the headlines might suggest.
Still, though, this is a fascinating story if you can stomach the risk. IonQ has a real chance at failure — but its success could provide massive returns for investors.
On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.