The NVDA Alternatives: 3 Stocks Offering Superior Growth Prospects to Nvidia
Nvidia (NASDAQ:NVDA) recorded more than 220% returns in the last twelve months, mainly due to the AI explosion. The company’s upward trajectory could be running out of steam.
High-profile investors are starting to cash out. The company’s old rivals, like Intel, are also starting to produce AI chips. The then-GPU maker is now facing significant competition as everyone wants a piece of the market. And it will only get tighter going forward. This is why some investors seek stocks offering better growth than Nvidia.
So with a market brimming with tech companies touting AI-adjacent products and services, how can one make a decent pick? I think it’s wiser to look into companies with tried-and-tested formulas or ones that present a compelling picture of their future, like these three.
Advanced Micro Devices (AMD)
First, Advanced Micro Devices (NASDAQ:AMD) has come a long way and become a tech powerhouse. It’s mostly known as the alternative to Nvidia in the GPU market and Intel in the CPU market.The company’s operation data center segment oversees its key products. Those include its server CPUs, AI accelerators, graphic processing units and accelerated processing units.
Also, AMD’s latest Instict MI300X GPUs are seeing market exposure. Late last year, Microsoft announced that it would use the chip for its accelerated virtual machines. This can be another growth avenue for AMD.
Meanwhile, 2023 was a slight off-year for the company. Full-year revenue and gross profit decreased 4% and 1%, respectively. Fiscal year 2024 predictions also remain flat to negative, which might not incite much confidence from investors.
Additionally, AMD is playing catch-up with Intel and Nvidia regarding market share for CPUs and GPUs/data centers. However, the company is no stranger to this position. It has repeatedly demonstrated the ability to recover with significant market share boosts.
Ryzen’s launch is a testament to that, boosting AMD CPU coverage from the low 20s to nearly 40% in half a decade. On the AI front, the company is expanding its offerings, including announcing the Ryzen 8040 Series mobile CPU and the Ryzen 8000G Series for desktops. Both are integrated with neural processing units for AI workload acceleration.
While most investors wouldn’t see it winning head-to-head with Nvidia right now, its promise for growth is a different story.
Micron Technology (MU)
GPU and CPU chips aren’t the only things in demand. External memory chips are also crucial, especially for larger neural networks. Micron Technology (NASDAQ:MU) is tackling the AI boom with its high-performance memory products and is a leader in memory and storage solutions.
Its HBM3E memory helps accelerate the growth of AI with its lightning-fast data access of 1.2 terabytes per second bandwidth. It operates at a 30% lower power consumption than other competitive offerings. HB3ME is so good that it has sold out its supply for 2024 and most of its 2025 supply, signifying its product’s superiority to its market competition.
Further, the company’s products were so well received that it reached revenue of $5.82 billion for Q2 of 2024. That is significantly higher than its $3.69 billion for the same year-ago quarter. GAAP net income ended at $793 million, a turnaround from its previous year’s GAAP net loss of $2.31 billion.
“Micron delivered fiscal Q2 results with revenue, gross margin and EPS well above the high-end of our guidance range — a testament to our team’s excellent execution on pricing, products and operations,” said Sanjay Mehrotra, President and CEO.
Finally, MU anticipates continued growth, driven by the demand for AI and tight supply dynamics in the semiconductor industry. The company is still on the road to recovery after its massive ban from China last year. So, if you are in the market for stocks offering better growth prospects than Nvidia, this is it.
Super Micro Computer (SMCI)
Mostly known as Supermicro, Super Micro Computer (NASDAQ:SMCI) is a high-performance server specialist that offers application-optimized servers and storage systems for various enterprises.
While the company may not be as big as Dell Technologies and Hewlett Packard Enterprise on a global scale, it is uniquely positioned due to its long-standing partnership with Nvidia for its dedicated AI servers and the wave it brings in the growing trend.
While some may think that Supermicro is riding the coattails of the GPU giant, I certainly disagree. Its application-optimized servers and Nvidia GPUs help pre-trained models fine-tune and improve decision-making and response times for AI inference solutions.
This was a strong combination, as its latest quarterly financials reported a 103% year over year (YOY) growth in net sales, which amounted to $3.66 billion.
Also, SMCI’s net income reached $296 million, nearly double that of the previous year. CEO Charles Liang attributes the company’s exceptional performance to the increasing demand for its AI computer platforms and Total IT Solutions.
In terms of outlook, SMCI expects revenue for fiscal year 2024 to be between $14.3 billion and $14.7 billion, adjusted higher from the previous announcement. With its strong growth and robust AI product offerings, it’s no wonder investors view SMCI as one of the stocks offering better growth than Nvidia.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
