The cryptocurrency sector continues to mature, with significant trends emerging in 2024 that highlight the growing importance of infrastructure within the industry. Notable areas of investment include blockchain infrastructure and digital payment solutions. These are crucial and essential for supporting the broader adoption of cryptocurrencies.
Furthermore, the regulatory environment is evolving, with many countries developing frameworks to support crypto industry growth. These regulations are aimed at providing clarity and security.
All of these points are bullish tailwinds for crypto infrastructure stocks to be worth far more in the future. The following companies warrant investors’ attention, given their growth trajectory and overall potential.
So, let’s dig into three crypto infrastructure stocks that investors should consider adding to their portfolios this month.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) is one of the largest publicly traded Bitcoin (BTC-USD) mining companies.
In fact, MARA’s Q1 of 2024 revenue grew by an impressive 223% year-over-year (YOY) to $165.2 million. Increased Bitcoin production and higher Bitcoin prices drove the stock higher. The company’s mining operations are highly profitable, with adjusted EBITDA surging 266% to $528.8 million.
Looking ahead, Marathon Digital has laid out ambitious growth plans that could steer continued revenue and earnings increases. The company is targeting 50 EH/s of mining capacity by year-end 2024, nearly doubling from the 27.8 EH/s it had at the end of Q1.
From a valuation perspective, MARA’s current forward price-to-earnings (P/E) ratio of 6.17x looks quite attractive if the company can execute on its growth initiatives. Analysts are forecasting strong top-line growth. And revenue is expected to increase over 80% to $710 million in 2024. Therefore, MARA’s valuation multiples could quickly expand to levels more in-line with the company’s robust growth profile.
CME Group (CME)
CME Group (NASDAQ:CME) operates derivatives exchanges, including those for cryptocurrencies like Bitcoin and Ethereum (ETH-USD).
In Q1 of 2024, CME Group reported record adjusted net income and earnings per share. It was driven by strong trading volumes in key products like U.S. Treasury futures and options and commodities. The company’s average daily volume reached 26.4 million contracts. Revenues increased a respectable 3.2% YOY to $1.5 billion, while adjusted EPS grew 3.4% to $2.50.
On the other hand, CME shares trade at nearly 20 times forward earnings estimates. Though not overly expensive relative to the broader market, this isn’t an obviously cheap multiple for a mature, slow-growth financial exchange. The stock’s modest 2.36% dividend yield, while attractive, is also not high enough to drive significant outperformance in the short run. Still, CME’s initiatives are enough to make it one of those crypto infrastructure stocks that could double within the next decade as demand for derivatives ramps up.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) manufactures GPUs and other computing equipment used in cryptocurrency mining.
Notably, AMD stock could potentially double from current levels. Firstly, AMD delivered impressive financial results in Q1 of 2024, with revenue growing 2% YOY to $5.5 billion despite a challenging macro environment. The company’s Data Center and Client segments were particularly strong, each growing over 80%.
Looking ahead, AMD is poised to benefit from the explosive growth in artificial intelligence (AI). As Chief Executive Officer (CEO) Dr. Lisa Su noted, widespread AI deployment is driving demand for significantly more compute power across many markets. AMD is enabling AI capabilities across its entire product stack, from data center GPUs and CPUs to PC processors. The company’s MI300 accelerators are showing strong early traction.
Further, the main risk to the bullish thesis is AMD’s rich valuation. At a forward P/E of 44x, the stock is pricing in a lot of growth already. AMD will need to maintain its strong execution and market share gains to justify its premium multiple. However, it’s one of those crypto infrastructure stocks that have a solid chance of doubling in value.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
