Which AI (artificial intelligence) stocks are a better deal than Nvidia
Since the release of OpenAI’s ChatGPT in November of last year, interest in artificial intelligence (AI) has increased dramatically, contributing to the market’s explosive growth. The expansion of the industry has helped countless stocks, which has caused the Nasdaq-100 Technology Sector index to rise 50% year to date.
Amidst all of the enthusiasm surrounding AI, Nvidia (NASDAQ: NVDA) has emerged as one of the greatest winners. Due to its years of dominance in graphics processing units (GPUs), which are essential to the development of AI models, the company was well-positioned to benefit greatly from the market’s expansion. Because of this, Nvidia’s stock has increased 237% since January 1 along with the company’s results.
Even though Nvidia was among the greatest investments in 2023, there will be better choices in 2019. It may be wiser for investors with an interest in AI to purchase stocks now from businesses that are just beginning to expand their use of the technology and have greater potential for future growth.
So disregard Nvidia. These two AI stocks are currently far superior investments.
Alphabet: The best bargain in AI
While investing in Artificial intelligence through chipmakers like Nvidia is appealing, software businesses that are creating the platforms that will enable the technology to be used in billions of homes should also not be disregarded. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of powerful brands like YouTube, Android, and the plethora of goods under Google, is a compelling choice.
Competitors like Microsoft and Amazon have somewhat eclipsed the business in AI this year. The graph below, however, demonstrates that Alphabet’s stock is currently among the best deals in AI, with a lower price-to-earnings ratio providing far greater value than both Nvidia and these businesses.
The CEO of Alphabet, Sundar Pichai, reiterated in May that the business has been using AI for seven years and that it is on its “journey as an AI-first company.” In 2023, though, Alphabet accelerated its market expansion. The company’s current project is the development of a large-language model, called Gemini, using enormous amounts of data. It is anticipated to be on sale in the first quarter of 2024 and face fierce competition from other models.
Furthermore, considering its capacity to leverage AI to advance several facets of its operations, Alphabet makes for a compelling AI investment. AI will probably assist Alphabet, one of the largest brands in advertising, in providing more relevant adverts on YouTube and Google Search. AI, meanwhile, can enhance user experience on well-known platforms, like Chrome, Gmail, Google Docs, Maps, and more.
Alphabet: The best bargain in AI With Google
With Google Cloud, the corporation also enjoys a strong position in the cloud industry, where demand for AI services is rising as companies look for ways to incorporate the technology into their regular operations.
Over the past five years, Alphabet’s yearly revenue has increased by 107%, and its operating income has increased by 130%. The business has established its dependability over time, and with AI’s assistance, it might grow significantly. Alphabet stock is a compelling substitute for Nvidia, considering the limitless prospects for generating revenue from its AI products in the future.
AMD: A strategy to subvert Nvidia’s hegemony (Which AI stocks are a better deal than Nvidia)
Advanced Micro Devices (NASDAQ: AMD), which has increased 86% since January 1. ADM is one of the chip stocks that has soared the greatest this year, after Nvidia. Even if it is hardly comparable to Nvidia’s growth. The company is still in the early phases of its AI expansion. Which may present more opportunities for new investors in the coming year.
With a new AI chip on the horizon and a rebounding PC industry, AMD has a bright future in 2024. The business announced the newest chip in the MI300 series in June. Claiming it to be the most powerful GPU it has ever made. The new processor is intended to compete with Nvidia’s products and will be released the following year.
In 2023, AMD made two acquisitions in addition to new hardware in an effort to advance its AI software. The company has invested in start-ups Nod.ai and Mipsology in the past few months. Which will probably be crucial to its data center business and enable. It provides AI developers with the best possible experience while using its GPUs.
AMD’s business saw sharp decreases last year as the computing industry as a whole was hammered by macroeconomic problems. It is, meanwhile, profiting from a slow but steady rebound in the PC market. As evidenced by the Q32023 customer segment’s 42% sales growth and return to profitability. The company may be among the greatest investments this month. As it enters the new year with promising possibilities in several areas of its operations.
Market Value of AMD’s (Which AI stocks are a better deal than Nvidia)
AMD’s market value is currently at roughly $195 billion, whereas Nvidia’s surged to over $1 trillion this year. These companies are at radically different stages of development, even though they are frequently compared. Given its smaller market capitalization, AMD might have far more potential for growth. In the long run, be a much more profitable AI stock.
The Motley Fool’s board of directors includes John Mackey, the former CEO of Whole Foods Market, an Amazon company. Alphabet executive Suzanne Frey is on The Motley Fool’s board of directors. None of the stocks mentioned are held by Dani Cook. The Motley Fool is invested in and endorses Nvidia, Microsoft, Alphabet, Amazon, and Advanced Micro Devices. There is a disclosure policy at The Motley Fool.
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