Bitcoin has emerged as a top-performing investment asset over the past decade, despite its well-known price fluctuations. Investors who have committed to holding their Bitcoin have often seen transformative returns. Nevertheless, this historical performance does not imply that Bitcoin is a guaranteed investment choice for today’s market. Unlike stocks, cryptocurrencies do not generate cash flow, which is a critical component of traditional investments. While the prospect of rising prices can be enticing, cryptocurrencies essentially rely on the hope that other investors will join the market, making them considerably riskier than most stocks linked to the financial performance of an actual business. Below are two stocks that present greater potential than any cryptocurrency, thanks to their substantial cash flow generation for shareholders year after year.
1. Alphabet’s AI Promise
First on the list is Alphabet (GOOG), a technology giant leading the charge in artificial intelligence (AI) advancements. The company is the parent of Google, YouTube, Google Cloud, and Waymo, the self-driving car service. With a market cap nearing $3 trillion, Alphabet ranks among the largest firms globally. While some see the rise of AI as a challenge to Alphabet’s dominance, the company is uniquely positioned to capitalize on the AI revolution. Alphabet has billions of users engaging with its various services, which provides a wealth of data to train its AI systems, including its latest tool, Gemini. Additionally, Alphabet has developed the tensor processing unit (TPU) over the past decade, allowing it to handle more AI queries than competitors like OpenAI. These competitive edges suggest that Alphabet will experience significant growth in AI-related revenue in the coming years. Last quarter, the company’s subscription revenue climbed by 20% year over year to reach $11.2 billion. Meanwhile, Google Search continues to perform robustly, with revenues increasing by 12% year over year to $54 billion. Notably, Alphabet generated $67 billion in free cash flow over the past year, all while investing heavily in expanding its data center operations, with expenditures projected to reach $75 billion in 2025. In contrast, OpenAI has yet to achieve positive cash flow, underscoring Alphabet’s position as a prime AI investment for the long run.
2. Traveling the World with Airbnb
Airbnb (ABNB) could also benefit from advancements in AI, particularly in enhancing consumer search capabilities on its platform, yet its investment narrative is more straightforward. The company, which specializes in unique home-sharing accommodations, is broadening its reach into new markets to encourage more homeowners to list their properties, ultimately increasing bookings. By customizing its marketing strategies and platform features for various regions, Airbnb has recently observed a surge in bookings in markets like Japan and Germany. While Airbnb reported an impressive $23.5 billion in gross booking value last quarter, its business remains heavily reliant on key markets such as the United States, United Kingdom, and France. By expanding into new tourist hotspots like Japan and Mexico, Airbnb is poised for accelerated growth in the years ahead. The company’s financial performance is commendable; it generated $11.6 billion in revenue over the past year, marking a 13% year-over-year increase, and has seen a cumulative revenue growth of 243% over five years. Despite being a relatively new entity, Airbnb is producing strong free cash flow, totaling $4.3 billion over the last 12 months, which is being utilized to repurchase shares—a strategy also employed by Alphabet. This approach is expected to enhance long-term earnings per share (EPS) growth. Overall, a close examination of their financials clearly indicates that both Alphabet and Airbnb present more favorable investment opportunities over time than the speculative nature of cryptocurrencies.
