Should You Forget Nvidia and Buy These 2 Tech Stocks Instead?

Should You Forget Nvidia and Buy These 2 Tech Stocks Instead?

  • 20.03.2025 10:20
  • fool.com
  • Keywords: danger, success

The article compares investing in Nvidia with alternatives like Amazon and AMD. It highlights Amazon's e-commerce and cloud dominance, driven by AI, and AMD's growing presence in AI chips as a competitor to Nvidia.

Nvidia NewsAmazon ServicesNvidia ServicesNVDAsentiment_satisfiedAMZNsentiment_satisfiedCPTsentiment_satisfied
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Estimated market influence

Nvidia

Nvidia

Positivesentiment_satisfied
Analyst rating: Strong buy

Nvidia has experienced significant growth due to the AI boom, with a revenue increase of over 200% since 2020.

Amazon

Amazon

Positivesentiment_satisfied
Analyst rating: Strong buy

Amazon's AWS and e-commerce businesses have benefited from AI integration, leading to substantial revenue growth.

AMD

AMD

Positivesentiment_satisfied
Analyst rating: Buy

AMD is a key player in the AI chip market, with notable revenue increases despite being a smaller competitor to Nvidia.

Context

Analysis and Summary: Should You Forget Nvidia and Buy These 2 Tech Stocks Instead?

Key Insights and Market Implications

Amazon

  • Market Cap: $2.1T
  • Current Price: $195.26 (up 1.26% today)
  • Revenue Growth: Net sales rose 11% to over $638B in the last year.
  • Operating Income: Increased nearly 90% to $68B, with AWS contributing ~60% of this.
  • AI Impact: AI enhances efficiency in e-commerce and provides valuable tools for shoppers/sellers, reducing costs and improving customer retention.
  • AWS Dominance: Annual revenue run rate of $115B, driven by AI products/services.

Business Implications:

  • Amazon's diversified business model (e-commerce and cloud) offers stability and growth opportunities in the AI-driven economy.
  • AWS remains a critical profit driver, with significant potential for further AI integration.

AMD

  • Revenue Growth: Data center revenue surged 94% to $12B last year; total revenue up 14% to $25B.
  • Gross Margin: 49%, indicating strong profitability despite lower market share (~20%) compared to Nvidia (80%).
  • Competitive Position: Offers more affordable AI chips, positioning it as a viable alternative for cost-conscious customers.

Business Implications:

  • AMD's growth trajectory suggests potential to capture market share in the expanding AI chip market.
  • Lower pricing strategy could attract new customers and drive further revenue expansion.

Nvidia Context

  • Growth: Surged 2,000% over five years due to AI boom.
  • Market Leadership: Dominant player in AI chips with an 80% market share.

Analysis:

  • While Nvidia remains a top performer, its high valuation and market leadership make it less attractive for investors seeking alternatives.
  • Amazon's diversification and AMD's competitive pricing position them as attractive options for tech investors looking to capitalize on the AI trend without relying solely on Nvidia.

Strategic Considerations

  • Diversification: Amazon offers exposure to both e-commerce and cloud computing, reducing risk compared to a single-focus company like Nvidia.
  • Growth Potential: AMD's significant revenue growth and profitability suggest it is well-positioned for continued expansion in the AI chip market.

Long-Term Effects and Market Trends

  • The AI-driven tech sector is expected to continue growing, creating opportunities for companies that can innovate and scale effectively.
  • Investors may benefit from a diversified portfolio including both established giants like Amazon and high-growth players like AMD.

Competitive Dynamics

  • Nvidia's dominance in AI chips faces competition from AMD, which is gaining traction through competitive pricing and performance improvements.
  • Amazon's integration of AI across its operations underscores the broader impact of AI adoption across industries.

Conclusion

While Nvidia remains a leader in AI technology, investors should consider alternatives like Amazon and AMD for diversification and growth potential. Amazon's established market presence and AWS dominance provide stability, while AMD offers significant upside as it continues to challenge Nvidia in the AI chip market.