Should You Forget Nvidia and Buy This Artificial Intelligence (AI) Stock Instead?

In the rapidly growing world of artificial intelligence (AI), Nvidia (NVDA) has long been the go-to stock for investors seeking exposure to the sector. However, with the AI market expanding and new players emerging, it's worth exploring alternative AI stocks that could offer attractive growth prospects and competitive advantages. One such stock is Advanced Micro Devices (AMD), which has been making significant strides in the AI hardware market.



AMD's revenue growth has been impressive, with a compound annual growth rate (CAGR) of 14.5% expected from 2022 to 2026. This growth is driven by its data center and gaming segments, which have seen strong demand for AI workloads and high-performance computing. Additionally, AMD's earnings per share (EPS) are expected to grow at a CAGR of 21.5% during the same period, reflecting the company's strong financial performance.



One of AMD's key advantages is its focus on AI-capable edge devices, such as smartphones and PCs. The company has expanded its portfolio of AI-capable Ryzen CPUs, which come with a neural processing unit (NPU) capable of clocking 50 trillion operations per second (TOPS). This allows AMD to tap into the secular growth of the AI PC market, which is expected to grow by 165% in 2025.

Another alternative AI stock to consider is Broadcom (AVGO), which helps customers design custom AI chips called application-specific integrated circuits (ASICs). These chips are designed for very specific tasks and offer better performance and lower energy consumption than GPUs. Broadcom has secured several large customers, including Alphabet, Meta Platforms, ByteDance, OpenAI, and Apple, for its custom AI chips.



Broadcom expects its three largest hyperscaler customers to deploy up to 1 million AI chips each in 2027, representing a $60 billion opportunity. The company's custom AI chip offerings provide it with a unique competitive advantage in the AI hardware market, as these chips are designed to meet the specific needs of each customer.

While Nvidia remains a strong player in the AI hardware market, AMD and Broadcom offer attractive growth prospects and competitive advantages that make them worthy of consideration. AMD's focus on AI-capable edge devices and Broadcom's custom AI chip offerings position them well to capitalize on the growing demand for AI workloads and the expanding AI market.



Investors should carefully evaluate these alternative AI stocks and consider their potential for growth and competitive advantages. By doing so, they can make informed decisions about which AI stocks to include in their portfolios and capitalize on the growing AI market.