Nvidia has been a powerhouse in the stock market, up by about 26,000% over the past decade. With a market capitalization reaching approximately $3.5 trillion, it stands as one of the most valuable companies globally. The company’s explosive growth is evident in its fiscal Q1 results, where data center revenue skyrocketed to $39.1 billion, significantly up from $4.3 billion two years prior. However, as Nvidia continues to grow, its percentage gains may diminish, prompting investors to seek alternatives.
Why Look Beyond Nvidia?
Nvidia’s massive scale means its growth percentage may naturally slow down. Investors looking to diversify their AI exposure are eyeing other stocks with potentially higher upside. Two strong contenders in this space are AMD and Broadcom.
AMD: Carving a Niche in AI Inference
While Nvidia dominates AI training chip markets, AMD is making strides in AI inference, a market expected to grow larger over time. Nvidia’s CUDA platform provides an edge in AI model training, but AMD’s ROCm software is gaining traction for inference tasks. This shift is pivotal as inference focuses more on cost, latency, and efficiency.
– AMD’s GPUs are increasingly used by major AI model companies for daily inference tasks.
– Cloud providers are turning to AMD for search, recommendations, and generative AI tasks.
– Even modest market share gains can drive significant growth due to AMD’s smaller revenue base.
Beyond GPUs, AMD leads in data center CPUs, critical components for servers. As AI infrastructure spending rises, AMD’s CPU growth is expected to remain solid. The biggest risk for AMD is a potential slowdown in AI spending or if its hardware remains a secondary choice to Nvidia’s.
Broadcom: A Custom Chip, Networking, and Virtualization Leader
Broadcom’s AI growth story spans hardware and software. It produces key components for AI clusters, such as Ethernet switches and NICs, essential for data movement in AI systems. As AI clusters grow, Broadcom’s networking portfolio becomes increasingly valuable.
– AI networking revenue jumped 170% last quarter, comprising 40% of its AI revenue.
– Broadcom designs application-specific integrated circuits (ASICs) for specific use cases, offering better performance and lower power usage than GPUs.
Broadcom initially helped design tensor processing units (TPUs) for AI workloads in Google Cloud’s TensorFlow framework. Inspired by its success, more customers are seeking Broadcom’s expertise in custom AI chips. This opportunity could yield up to $90 billion, with large customers just beginning deployments.
While Broadcom’s hardware business garners attention, its VMware unit also benefits from AI. VMware’s Cloud Foundation platform aids in managing AI workloads across clouds and on-premise servers, gaining traction as enterprises adopt hybrid AI environments.
Two Strong Stock Alternatives
If Nvidia is the AI infrastructure king, AMD and Broadcom are its best challengers. AMD is gaining momentum in AI inference and remains a leader in data center CPUs. Broadcom powers AI infrastructure through networking hardware, custom chips, and virtualization software.
Both companies offer unique angles on AI development, presenting strong growth potential. For investors seeking exposure to AI without investing further in Nvidia, AMD and Broadcom are high-quality, high-upside stocks to consider.
Should You Invest $1,000 in Nvidia Now?
Before investing in Nvidia, consider this: analysts have identified what they believe are the best stocks for investors to buy now, and Nvidia wasn’t among them. The selected stocks could yield substantial returns in the coming years.
Note: This article is inspired by content from https://www.msn.com/en-us/money/companies/should-you-forget-nvidia-and-buy-these-2-artificial-intelligence-ai-stocks-instead/ar-AA1GHk97?ocid. It has been rephrased for originality. Images are credited to the original source.