After watching the price of many cryptocurrencies crash more than 20% last week, you might be tempted to buy any one of the controversial digital assets.
But even putting aside the underlying reasons for that plunge -- namely a combination of worries over waning interest from traders, competition between various coins, and ongoing regulatory threats from governments around the world -- it seems investors are forgetting about the most effective wealth-creating machine our world has to offer: the stock market.
To that end, we asked three top Motley Fool investors to each pick a stock that they believe investors would be wise to consider instead of buying cryptocurrencies. Read on to learn why they like Amazon (NASDAQ:AMZN), Intel (NASDAQ:INTC), and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL).
A virtuous cycle of strength
Steve Symington (Amazon.com): While there's no arguing that cryptocurrencies could be a disruptive force in the financial world years from now, Amazon.com continues to demonstrate its ability to disrupt multiple industries ranging from e-commerce to online video, package delivery, smart homes, cloud computing, and -- thanks to the fruits of its $13.7 billion acquisition of Whole Foods last year -- even the grocery market.
The proof is in the pudding. Amazon's revenue last quarter alone crushed expectations by soaring 38% year over year to $60.5 billion, including 40% growth in its core North American retail segment to $37.3 billion, a 29% increase in international sales to $18 billion, and a 46% gain in its lucrative Amazon Web Services cloud computing business to $5.1 billion.
One unique driving force behind Amazon's strength is the outsized adoption of its Alexa digital assistant, which CEO Jeff Bezos noted "far exceeded" the company's "very optimistic" projections for last year. As it stands, Alexa now has more than 30,000 "skills" -- or apps that increase Alexa's capabilities -- from outside developers, enabling customers to use their voices to do everything from playing music to answering questions, shopping online, or controlling any one of thousands of smart home devices.
"We don't see positive surprises of this magnitude very often -- expect us to double down," Bezos teased.
As Alexa continues to gain steam, it will only serve to make Amazon a more integral part of our lives. And I think even with Amazon stock trading near all-time highs, its stock will inevitably follow suit.
Powering the cloud
Tim Green (Intel): Buy cryptocurrencies if you want to be a gambler. Buy shares of high-quality companies if you want to be an investor. Investing in Intel, the leading provider of PC and server chips, is one way to bet on a major trend without exposing yourself to massive risks. The company's products are powering the shift to cloud computing, generating plenty of profits along the way.
In 2017, Intel's data center group generated $19.1 billion of revenue, up 11% year over year, and $8.4 billion of operating income. Other non-PC businesses also posted strong growth, with Internet of Things revenue up 20%, nonvolatile memory solutions revenue up 37%, and programmable solutions revenue up 14%. And with Intel planning to develop its own discrete graphics solutions, aimed at the high-end PC gaming and data center markets, the company's dependence on mainstream PCs will drop even further going forward.
There are certainly risks for Intel. Rival Advanced Micro Devices is making a push into the data center market with its EPYC server chips. So are Qualcomm with its ARM-based Centriq chips and International Business Machines with its new POWER9 chips. The market may grow fast enough for Intel to grow revenue and profits even if it loses market share. But it also may not.
Still, if you're choosing between speculating on cryptocurrencies and investing in Intel stock, it's a no-brainer.
A long-term winner on sale for no good reason
Anders Bylund (Alphabet): Though I'm invested in a small stack of cryptocurrencies, I seriously can't think of a better investment opportunity than Alphabet right now.
Google's parent company missed Wall Street's earnings estimates in the recently reported fourth quarter, despite beating their revenue projections by a modest margin. Share prices fell more than 5% the next day, spooked by this rare earnings miss.
Sure, you can nitpick to find a motivation for that sudden price drop. Alphabet's hardware sales are surging, led by strong holiday sales of products like Chromecast and the Google Home range of digital assistants. That's good for the top line but bad for margins, because hardware sales obviously carry higher manufacturing and distribution costs than online services.
But it also makes Alphabet a more diverse company with a broader range of revenue streams. The so-called "other bets" division is growing in stature, powered by Google Fiber internet services, Nest-branded smart home devices, and Verily life sciences.
In short, market makers are selling Alphabet stock when the company is doing everything right. Today's lower profit margins are paving the way to decades of solid and predictable growth. The online giant you know today will transform into a multi-industry conglomerate over time, and is just taking some early baby steps today.
So if you want predictable growth for the long run, as opposed to the hit-or-miss gamble you'll get in the current batch of cryptocurrencies, Alphabet would be it.
The bottom line
We can't absolutely guarantee that shares of these three incredible businesses will beat cryptocurrencies or even the returns of the broader market. But between Amazon's disruptive ways, Intel's CPU industry leadership, and Alphabet's status atop the global internet search market, as well as their collective history of generating staggering returns for shareholders, we like their chances of doing just that. And we think investors will be much better off owning their stocks for years to come.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anders Bylund owns shares of Alphabet (A shares), Amazon, and Intel. Steve Symington has no position in any of the stocks mentioned. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.