Investors hear the words “decentralization” and “permissionless,” not to mention artificial intelligence, machine learning and cryptocurrency, but they may treat them as separate concepts. Yet they all come together in the emerging idea of Web3. That’s why it’s time to consider some of the favorite Web3 stocks to buy in 2024.
The internet has come a long way, from dial-up connections to static pages and HTML. However, Web 2.0 has brought the walled garden approach, making many users concerned about privacy issues.
Web3 is defined as the decentralization of the internet. That is, users can control their data, including their identity. It will also provide a use case – if not a value proposition – for many cryptocurrency projects. One of those areas will be the gaming world, which will become more immersive than it is today.
Web3 is still in its early stages, but you know that technology moves fast. Many themes are emerging in this iteration of the internet and here are three of investors’ favorite Web3 stocks to consider.
Nvidia (NVDA)
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Nvidia (NASDAQ:NVDA) is an obvious choice as one of the favorite Web3 stocks to buy. The company’s graphics processing units (GPUs) are central to the gaming industry and for artificial intelligence applications. Those two concepts will merge in Web3.
That means demand for the company’s GPUs will remain strong. And that’s why Nvidia will remain one of the best picks-and-shovel investments for AI and Web3.
And the likelihood of this demand growth being a multi-year phenomenon means it’s not too late to buy NVDA stock, even with the stock up 242% in the last 12 months. However, that doesn’t seem as outlandish when considering that the company’s sales have increased 250% in the last year.
Analysts expect high single-digit growth in earnings in the next 12 months. That would suggest a normalization from the strong earnings growth of the last year. However, Nvidia has made a habit of beating analysts’ expectations, and if that continues to be the case, NVDA stock may have much higher to run.
Coinbase (COIN)
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As brought up in the introduction, one of the defining elements of Web3 will be the use of decentralized blockchain technology and cryptocurrency. Still, picking the right crypto may seem daunting and even foolish to investors.
Coinbase (NASDAQ:COIN) can be a good investment. Buying COIN stock is about investing in a growing crypto market – that is, more individuals putting money into the various altcoins – without picking any single player.
It’s fair to ask if COIN stock is a good investment. The stock is up 206.25% in the last 12 months. Much, but not all, of that gain has correlated with the surge in Bitcoin. And this is happeningdespite the overhang of its ongoing dispute with the Securities & Exchange Commission (SEC).
Your decision to buy COIN will depend on whether you believe Web3 will provide a valid, recognized use case for cryptocurrency. If so, demand should follow, which will be bullish for COIN stock.
Unity Software (U)
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If you’re looking for an “affordable” choice among the favorite Web3 stocks, Unity Software (NYSE:U) may be the choice. The company is leading in supporting designers with solutions to facilitate decentralized gaming.
For those who aren’t gamers (myself included), decentralized gaming means an experience that includes features like in-game ownership models that allow players to earn, create, or obtain in-game resources that they can sell or trade with cryptocurrency via the blockchain.
Unity’s revenue grew 58% year-over-year. The company is still not profitable, but the company’s earnings per share (EPS) lost contracted by 30%. While the company is not expected to be profitable in the next 12 months, the loss will narrow.
That seems enough for analysts who give U stock a 36% upside from its current price.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.
