The next generation of the internet will be decentralized.
That's the main idea behind the Web3 vision. The second-generation architecture we use today is all about social media platforms, e-commerce, and online collaboration -- all using a small group of platforms under the full control of large, powerful companies. The Web3 Foundation and other leaders of the upcoming sea change want to replace those monolithic online platforms with a more personalized experience controlled by widespread grounds of users and developers.
But the Web3 system will be a business arrangement at heart, and there will always be room for dedicated companies to make a fortune in this newfangled online architecture. Companies like Amazon and Yahoo! were game-changers in Web 1.0, followed by the likes of Meta Platforms and Twitter in Web 2.0. As you can see, some real winners are able to survive the shift from one online era to another. But every sea change tends to bring in a fresh-faced army of new winners.
On that note, here are three stocks you already know but that still look ready to make the leap into leading positions in the Web3 paradigm.
Shopify: Pioneering Web3 commerce
E-commerce platform provider Shopify(NYSE: SHOP) may look like a rock-solid representative of the Web2 era, but the company is actually making big strides toward a Web3 future. In fact, Shopify already supports many key pieces of a fully functional Web3 experience:
- With the help of third-party partners and app developers (the decentralized community is already in action!), Shopify customers can accept cryptocurrency payments. Dozens of crypto tokens are supported this way, from dollar-based stablecoins to tried-and-true Bitcoin.
- Non-fungible tokens (NFTs) can serve a Shopify store in many ways. You can mint them directly in the Shopify ecosystem, and then pair the tokens with digital or physical assets and sell them in your store. Some brands even use the tokengate feature, where owning NFTs from a special series gives you access to exclusive sales events in the future.
- And as long as you keep your NFTs in a supported digital wallet, that token helps you log in to Shopify without passwords, face scans, or fingerprint readers.
So there are some extra hurdles to leap if you want to build a Web3 store on Shopify -- but it can already be done, for all intents and purposes. The experience should become smoother and easier over time until Shopify starts feeling like a fully integrated Web3 solution.
Now, Shopify's stock is hardly cheap at 12 times sales and 110 times earnings, but you get what you pay for. In this case, those lofty valuations are attached to a flexible and rapidly evolving digital storefront platform, already adapting to the demands of the upcoming Web3 generation. And Shopify's sales have grown at a compound annual average rate of 53% over the last five years. This hungry e-commerce expert is going places and may actually be a great buy, even at these soaring share prices.
Microsoft: Azure's role in the Web3 era
For Microsoft(NASDAQ: MSFT), the journey into the Web3 world starts with the Azure cloud computing platform.
This global network of computing assets is a walking definition of the "decentralized" concept. I mean, sure, Microsoft is a central entity that runs the service, is responsible for keeping it in working order, and profits from its operations. But the apps and services you deploy on Azure can quickly reach every corner of the world, usually from a nearby data center with low-latency network access.
And many of Azure's tools are designed to support decentralized Web3 functions, such as the blockchain-as-a-service toolkit or the Confidential Consortium Framework -- a decentralized authentication system right in line with the ideals of Web3 development.
Redmond kick-started the personal computer market five decades ago and has survived several game-changing market evolutions since. Graphical user interfaces instead of text-based terminals? No problem. Connecting PCs to a global internet? No sweat. Microsoft missed the boat on mobile computing but survived through a renewed focus on productivity apps and big-iron server systems. And here we are, staring down the Web3 future, with Microsoft Azure providing a global platform for many leading players in this emerging market.
Microsoft is the second-largest stock on the market in terms of market capitalization. The shares are a bit pricey, changing hands for 36 times earnings and 12 times sales, but Microsoft keeps finding ways to earn that upscale valuation. And I don't see why the Web3 future would break Microsoft's decades-long winning streak.
AMD: The hardware backbone of Web3
Finally, even a decentralized computing system has to run its code on some sort of hardware. That's where Advanced Micro Devices(NASDAQ: AMD) comes in.
AMD's processor portfolio is deep and wide. Its Ryzen desktop chips and EPYC server solutions are high-powered and cost-effective solutions for many general computing problems. Its Radeon graphics processors can match up with the best high-performance computing solutions when you're dealing with complex number-crunching -- training rigs for advanced artificial intelligence (AI) solutions spring to mind.
All these products are important cogs in the Web3 machinery. Yes, AI is another central idea because many Web3 functions are trading out hands-on human involvement for intense automation.
It's a crowded field, and AMD doesn't have a monopoly on Web3 functions like AI training or low-cost general computing. However, the market will grow large enough to support many successful hardware providers, and AMD is well positioned to join that club.
In particular, its recent $50 billion buyout of Xilinx made AMD a leading provider of ultra-specialized embedded chips for special purposes. With that powerful asset in its tool belt, AMD should have no problem finding business opportunities in a Web3 world. After all, the Internet of Things is another manifestation of Web3 ideals, and Xilinx has been leading that charge for years.
As the world steadily moves toward a Web3 future, it's clear the transition is not just limited to new and emerging companies. Even established tech giants like Shopify, Microsoft, and AMD are actively leveraging their resources and capabilities to adapt to and benefit from this shift. They're integrating Web3 features, developing blockchain-friendly infrastructure, and building powerful hardware to support decentralized computing.
They're not just preparing for the future -- they are actively shaping it. As an investor, keeping a close eye on these developments could provide significant opportunities in the rapidly evolving Web3 landscape.
Find out why Shopify is one of the 10 best stocks to buy now
Our analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. Shopify is on the list -- but there are nine others you may be overlooking.
*Stock Advisor returns as of May 30, 2023
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Amazon.com and Bitcoin. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon.com, Bitcoin, Meta Platforms, Microsoft, and Shopify. The Motley Fool has a disclosure policy.