These 2 AI Stocks Are Outpacing Nvidia's, and They Can Still Soar Higher

Artificial Intelligence (AI) has emerged as a transformative force in the technology sector, driving significant growth and innovation. While Nvidia (NVDA) has been a dominant player in the AI hardware space, two other stocks have been outpacing it in recent months: Advanced Micro Devices (AMD) and Super Micro Computer (SMCI). In this article, we will explore the reasons behind their outperformance and discuss why they still have room to grow.



1. Advanced Micro Devices (AMD)
* AI Hardware Innovation: AMD's MI300 series AI accelerators target data centers and AI-specific workloads, rivaling Nvidia's A100 and H100 GPUs in memory bandwidth and power efficiency. The upcoming MI400 series, expected to launch in 2025, will feature the same interconnect fabric called XSwitch as Nvidia's NVLink, further enhancing efficiency and performance.
* Strong Financials: AMD's revenue surged 25% year-over-year in its fiscal Q1 2024, driven by strong demand for its AI hardware and data center solutions. The company's earnings per share (EPS) also grew by 30% year-over-year, demonstrating its ability to generate profits from its AI initiatives.
2. Super Micro Computer (SMCI)
* Efficient Server Solutions: SMCI's direct liquid cooling technology leads to major advancements in server efficiency, with up to a 25%-30% reduction in energy required to run a server farm. This technology has been worth the upfront investment for the company's data center clients, leading to a 143% surge in sales to $5.3 billion in its fiscal Q4 report.
* Impressive Revenue Growth: SMCI's revenue and earnings growth have outpaced industry rivals by more than 5x in recent quarters. The company's upcoming 10-for-1 split in late-September won't address its recent earnings miss or declining stock performance, but it could signal a turnaround in investor sentiment.



Both AMD and SMCI have demonstrated strong growth and innovation in the AI space, outpacing Nvidia in recent months. However, there are still challenges and risks to consider:

* AMD:
+ Intense competition in the AI hardware space, particularly from Nvidia.
+ Maintaining market share and profitability in the face of stiff competition.
* SMCI:
+ Short sellers alleging accounting manipulation tactics, which regulators are now exploring.
+ A significant decline in stock performance despite impressive revenue and earnings growth.

To manage these risks and challenges, investors should:

* Conduct thorough due diligence on each company's financials, business model, and competitive landscape.
* Monitor regulatory developments and geopolitical risks that could impact the company's operations.
* Diversify their portfolios to include a mix of AI stocks with different risk profiles and exposure to various AI sub-sectors.
* Maintain a long-term perspective and be patient, as AI stocks may experience volatility and setbacks along the way.
* Stay informed about industry trends and technological advancements that could impact the company's competitive position.

In conclusion, AMD and SMCI have been outpacing Nvidia in the AI space, driven by their innovative AI hardware and efficient server solutions. While there are still challenges and risks to consider, both companies have demonstrated strong growth and potential for continued success in the AI market. Investors should carefully evaluate these opportunities and consider adding these stocks to their portfolios.