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Crypto Infrastructure Plays Set to Soar
The cryptocurrency market is known for its volatility, but certain crypto infrastructure plays are poised for growth regardless of Bitcoin’s price movements. These infrastructure providers offer essential services and technologies that support the broader crypto ecosystem.
The crypto infrastructure is the backbone of the industry.
Key players in this space include companies involved in blockchain technology, crypto exchanges, and digital payment solutions. I also believe that crypto miners will be able to make a strong pivot or diversification into the data center industry. Meanwhile, semiconductor companies are also very worthy considerations.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ: AMD) produces high-performance GPUs used in cryptocurrency mining. The company’s products are in demand for their efficiency and performance in blockchain-related computations.
AMD’s GPUs are the go-to choice for crypto miners.
Robust growth prospects: Analysts project strong growth for AMD. This includes a five-year revenue growth forecast of 17.08% and an EPS growth forecast of 83.03%. These projections suggest that the company is well-positioned to capitalize on the growing demand for advanced processors and graphics cards in various industries.
AMD has been consistently introducing innovative products, including its Ryzen processors and Radeon graphics cards. Both products have gained significant market share and have been well-received by consumers and businesses alike. The company’s focus on innovation and performance has helped it compete effectively against larger rivals.
Despite its strong growth prospects and financial performance, AMD’s stock trades at a relatively attractive valuation compared to its peers. The company’s forward P/E ratio of 40x and PEG ratio of 0.66 suggest that the stock may be undervalued considering its expected growth.
Marathon Digital (MARA)
Marathon Digital (NASDAQ: MARA) is a prominent Bitcoin mining company with significant infrastructure investments. Its large-scale mining operations benefit from efficient and scalable systems, positioning it well regardless of Bitcoin’s market fluctuations.
Marathon Digital is a leader in Bitcoin mining.
MARA holds 18,536 BTC, which, along with cash, is valued at $1.4 billion. These substantial Bitcoin holdings provide the company with a strong balance sheet and the potential to benefit from future appreciation in the price of Bitcoin. MARA’s proprietary mining pool saw a 10% year-over-year increase in blocks captured.
MARA is actively expanding its operations and exploring new technologies. The company has made notable expansions in immersion cooling technology, which can improve mining efficiency and reduce costs. Additionally, MARA is pursuing international projects, such as a 2-megawatt pilot in Finland for sustainable heating.
MARA trades at a trailing P/E ratio of 9x and a forward P/E ratio of 6.17x, which are relatively low compared to the company’s growth potential. The company’s high return on equity (ROE) of 42.30% and return on invested capital (ROIC) of 19.86% indicate its ability to generate strong returns for shareholders.
IBM (IBM)
IBM (NYSE: IBM) is a major player in blockchain technology, offering enterprise solutions through its IBM Blockchain platform.
IBM is a leader in blockchain technology.
IBM’s recent acquisition of HashiCorp for $6.4 billion is a significant move towards becoming a software and services-focused company. HashiCorp’s expertise in cloud infrastructure management aligns well with IBM’s hybrid cloud strategy. Also, IBM has been making substantial investments in artificial intelligence (AI) and has already surpassed $1 billion in bookings for AI-focused products and consulting since mid-2023. As AI and blockchain become increasingly intertwined, I see strong potential for IBM to continue its growth in these two respective industries.
The biggest draw card for me with the company is this: IBM’s low beta of 0.72 suggests that its stock price is less volatile than the overall market. This defensive nature, coupled with the company’s consistent dividend growth over the past 28 years, makes IBM an attractive option for risk-averse investors seeking stable returns, particularly during times of market uncertainty.
