Even as Bitcoin (BTC-USD) ETFs reach record inflow rates and continually edge against all-time highs, some investors—institutional and otherwise—don’t see the “asset class” worth buying for a long-term investment. Vanguard Group execs, for example, see Bitcoin as too speculative and not worthy of consideration for a buy-and-hold style portfolio; that’s why we haven’t yet seen Vanguard offer their own Bitcoin ETF and likely never will. But that isn’t to say there’s no solid investment opportunity to capitalize on Bitcoin and generate exposure to that side of the market while diversifying holdings with a bias toward multiple use cases. Blockchain stocks, broadly speaking, correlate to Bitcoin’s price to a large degree while generating exposure to the many unique uses blockchain offers today and in the future including identity validation, contract settlement, and more.
As artificial intelligence trends surge, blockchain stocks and tech have largely fallen out of public favor – but these blockchain stocks offer a wide array of investment opportunities and long-term potential. At the same time, they help crypto-shy investors capitalize on Bitcoin’s current success – and may even outperform the top crypto in the long run.
Block (SQ)
Block (NYSE:SQ) is leaning into its status as a blockchain stock. After a few months of beta testing, the fintech company began a go-to-market strategy for its Bitcoin wallet product line last week. As the saying goes, “Not your keys, not your crypto,” and Block’s foray into wallet hardware is likely to capture a large segment of customers who aren’t comfortable with third-party custodianship provided by, for example, Block’s subsidiary CashApp.
Beyond its status as a blockchain stock, Block represents a unique investment into the wider fintech space. The company is large enough to remain sustainable while retaining sufficient “startup energy” to stay nimble and reactive to shifting conditions (the hardware wallets being a representative example). Last month, Block shares spiked after the company blew past Wall Street expectations in its fourth-quarter and end-of-year earnings report. Highlights included a 22% year-over-year (YoY) gross profit hike for Q4 as sales surged for both Square and CashApp. The company’s 2023 gross profit was likewise surprisingly strong, hitting $7.5 billion for a 25% YoY increase.
Blockchain Stock: PayPal (PYPL)
While PayPal’s (NASDAQ:PYPL) direct foray into crypto – the PayPal Stablecoin – may seem a cash grab designed to capitalize on crypto’s popularity and little else, the move conceals the innovative way PayPal is reimagining a part of its core business as a blockchain stock. Specifically, by creating a stablecoin backed by PayPal’s legitimacy and trust, PayPal reassures users that it won’t fall prey to the same pitfalls that collapsed similar stablecoins in the past.
More importantly, PayPal USD isn’t just an alternative to cash, credit, or check on PayPal’s native platform. Developers can integrate the stablecoin across their payment processing ecosystem if they meet specific blockchain tech parameters. This aspect of PayPal’s status as a blockchain stock is largely overlooked. Older investors may remember that PayPal’s success came, in large part, from the degree of security and trust it offered buyers and sellers in the early days of the Internet (when mailing a check to an online marketplace seller wasn’t unheard of!). Today, PayPal is taking a page from its own book by doing the same with crypto. In a world where crypto bots, shills, and scams abound, PayPal’s stablecoin gives buyers and sellers a greater sense of security that, in turn, will likely accelerate the stablecoin utilization rate – and give PayPal stock a solid boost to boot.
Accenture (ACN)
Consulting firm Accenture (NYSE:ACN) may seem an odd choice among blockchain stocks, considering its service-based business. However, Accenture is differentiating itself from its consulting competitors by being one of the few multinational mega-cap consulting firms offering a suite of blockchain-based consultancies, including business integration, metaverse management, supply chain streamlining, and digital identity management. As the tech advances and more businesses – of all sizes and types – look to blockchain opportunities to solve an array of business problems, niche consulting efforts to tailor blockchain to specific needs will become more important. Accenture, as one of the few doing just that at scale, is positioning itself for a long and fruitful initiative.
As a standalone stock, Accenture also offers investors stability and strength to anchor a blockchain-centric portfolio. The company’s first-quarter report highlights included $430 million in free cash flow, a 15% quarterly dividend increase, and a 6% earnings per share hike. Considering how speculative – and volatile – blockchain stocks can be, Accenture offers less risk than most.
Blockchain Stock: MercadoLibre (MELI)
Crypto is increasingly popular across Latin America as countries like El Salvador make Bitcoin part of their legal tender landscape. Argentinian eCommerce company MercadoLibre (NASDAQ:MELI) is keeping the trend alive while, like PayPal, offering bespoke crypto to buyers and sellers in a foray into differentiating itself as a blockchain stock. Beyond offering sales in Mercado coin (its in-house crypto), MercadoLibre is riding the wider blockchain wave by offering a digital wallet for traders to buy and sell a range of crypto, including Bitcoin.
However, MELI stock stands on its own merit, like Accenture, as it remains a major player in the Latin American eCommerce market. The company posted increasingly higher revenue and net income across each of the past five quarters, with year-end sales in 2023 approaching $15 billion. MercadoLibre’s management is also adept at keeping debt under control, rare for tech stocks in general but especially so in the world of rapidly growing eCommerce companies. That cash helps protect the company—and investors—navigate notoriously volatile LATAM economic conditions.
Taiwan Semiconductor Manufacturing Company (TSM)
Blockchain tech demands high-end hardware, and few semiconductor stocks are in the prime position to capitalize on the trend as Taiwan Semiconductor Manufacturing Company (NYSE:TSM). Despite being frequently highlighted by industry experts as a top semiconductor stock, its shares have “only” seen a 35% increase this year. This growth pales in comparison to Nvidia’s (NASDAQ:NVDA) staggering 82% surge, suggesting that TSM’s market valuation might not fully reflect its potential.
TSM’s global presence sets it apart, as it services a broad international customer base beyond many US-centric semiconductor companies. For instance, Japan is dumping cash into its TSM investments, funding the construction of local manufacturing facilities, and supporting the training of Japanese researchers and technicians. This not only opens up new income avenues for TSM but also mitigates the risk associated with the ongoing tensions with China by diversifying its geographic exposure.
When it comes to finances, TSM stands out with minimal debt and a substantial net margin. Despite the typical challenges international stocks face during global economic uncertainty, TSM’s stellar financial management has allowed it to not just survive but thrive. As higher-end tech requirements accelerate within the blockchain ecosystem, TSM stands out as one of the few semiconductor stocks with plenty of room to run.
Blockchain Stock: Broadcom (AVGO)
Like Accenture, Broadcom (NASDAQ:AVGO) is helping business owners integrate blockchain tech into daily operations. Unlike Accenture, Broadcom falls firmly within the “nuts and bolts” side of blockchain integration as it provides the necessary backbone and security to onboard, integrate, and manage blockchain across various use cases. This shift toward blockchain services helps Broadcom diversify its revenue streams, a sticking point in the past for the stock, particularly after closing its **VMware** merger.
In the past, Apple (NASDAQ:AAPL) accounted for more than 20% of Broadcom’s revenue across its 5G and wireless component segments. But between VMware’s cloud computing synergies and an emphasis on blockchain tech, Broadcom is reducing reliance on single-source income. Investors should know that the VMware integration will cost about $1 billion in transaction costs in the short term, but, like integrating blockchain tech, brief volatility is a small price to pay for long-term upside.
SBI Holdings Inc (SBHGF)
SBI Holdings Inc (OTCMKTS:SBHGF) is a massive Japanese conglomerate focused on a range of financial and similar services, including asset management, healthcare data, and biotechnology. But its blockchain stock potential lies in its “crypto-asset business,” an endeavor that brings together a range of crypto-adjacent and blockchain initiatives to “advance the SBI Group’s financial ecosystem in anticipation of a time when finance is becoming even more digital.”
Their initiatives include up to $100 million invested in global crypto startups, providing much-needed cash to smaller companies in light of higher interest rates that make debt prohibitively expensive. At the same time, investors can rest assured that SBI’s range of offerings ensures consistent profitability, as evidenced by its consistently-high dividend yield.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.