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Nvidia’s (NASDAQ:NVDA) stock has rocketed 154% this year, its performance powered largely by a seemingly insatiable demand for its GPU chips amid the proliferation of AI technology.
But Nvidia isn’t necessarily the only way to cash in on the chip feeding frenzy. Which brings us to today’s SA Asks investment question: What’s a good alternative stock to Nvidia?
We asked SA analysts Jonathan Weber, Michael Del Monte, Uttam Dey and Jere Wang of JR Research for their picks.
Jonathan Weber: I believe Taiwan Semiconductor Manufacturing Company (TSM) is a great alternative. It’s got an excellent market position and moat, strong growth, and benefits from Nvidia‘s momentum due to being Nvidia‘s manufacturer. It’s also significantly cheaper than Nvidia.
Michael Del Monte: You can play the trade a number of ways. I prefer going down one level to Oracle (ORCL), Dell (DELL) and Hewlett Packard Enterprise (HPE) as buyers of the GPUs for server builds, and in turn, for building out AI factories. Premiums remain relatively low, offering some upside potential from a valuation perspective.
Uttam Dey: Advanced Micro Devices (AMD) has its sleeves rolled up in two key markets that it is selling into: datacenter GPUs and PCs. On the data center front, it is expected to take back low single-digit market share, supported by an impressive product roadmap that now transitions to an annual launch cycle to match NVDA. The PC market and devices are set to see some marginal growth as well. With revenue expected to grow in the high teens and earnings expected to outpace that, AMD could easily see double-digit growth in its stock.
Jere Wang of JR Research: Nvidia benefits from the AI data center infrastructure buildout. It’s the market leader by a mile. However, AMD’s AI business is expected to exceed $4B this year, from nearly nothing last year. I believe AMD could be considered an alternative to ride the AI gold mine.
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