NVIDIA (NASDAQ: NVDA) The company gained attention in the first half of the year, when its stock price rose about 150% and it reported triple-digit profit growth. The company gained further attention when it announced and then completed a 1-for-10 stock split, which caused the company’s stock price to fall from over $1,000. Nvidia remains a great buy today, as it dominates the artificial intelligence (AI) chip market and demand in this high-growth market is likely to continue to rise for some time to come.
But there are two stocks that are better buys than Nvidia right now. These stocks are cheaper than the major chip designers and are positioned to benefit from demand for AI products and services in the coming months and years. That makes now a great time to invest in these companies and profit as their revenues soar.
1. Intel
Intel (Nasdaq: INTC) The company didn’t get off to a spectacular start in the AI race: It’s a longtime leader in the market for central processing units — the main processors in any computer — but it has lagged behind when it comes to beefing up its AI platform.
But the company recently made a key shift, focusing on AI and also launched a new portfolio of AI products, including the Intel Core Ultra mobile processor family to support AI personal computers, or high-performance PCs that can handle AI tasks. Intel also released the Gaudi 3 AI accelerator, a chip that delivers 50% better inference performance and 40% better power efficiency than Nvidia’s best-selling H100.
Intel’s Gaudi 3 is significantly cheaper than the Nvidia offering, providing Intel with an opportunity to gain market share among cost-conscious customers.
On top of this, Intel recently opened up its chip manufacturing network to other companies and is aiming to become the world’s second-largest foundry by 2030. While this won’t translate into immediate revenue growth, it could become a big revenue driver over time if Intel is successful.
Currently, Intel’s stock trades at 28 times forward earnings, while NVIDIA’s is trading at 47 times. Granted, NVIDIA’s earnings growth story over the past few quarters has been much more compelling than Intel’s, but Intel may be trying to turn things around. Even if the company never reaches NVIDIA’s levels of serving the AI market, Intel could still be a big success, and its stock price could soar as this story unfolds.
2. Oracle
Oracle (NYSE: ORCL) You may be far behind the leaders Amazon In terms of cloud market share, Amazon Web Services is the world’s largest cloud service provider, but Oracle is growing fast – as evidenced by the fact that in the third quarter of fiscal 2024, Oracle’s total cloud revenue will exceed its license and support revenue for the first time.
AI customers are flocking to Oracle’s range of cloud services, from public clouds to sovereign clouds to Oracle Alloy, which allows partners to become cloud providers. Customers also like Oracle’s multicloud services, which make it easy to deploy projects across Oracle and other providers. MicrosoftOracle also offers its services at lower prices than its competitors, which will obviously be an attractive factor for customers.
All of this is translating into accelerating demand and revenue growth, as seen in the company’s latest earnings report. In the past two quarters, Oracle signed its largest-ever sales deals with customers looking to train large-scale language models on Oracle Cloud, which increased its remaining performance obligation (RPO) — the future revenue the company expects from contracts — by 44% to $98 billion. The company expects this trend to drive double-digit revenue growth for the full year.
The company also said that despite recent data center expansions, demand for its Gen2 AI infrastructure continues to outstrip supply.
Meanwhile, Oracle’s stock is trading at just 23 times forward earnings, a bargain given the momentum of AI demand and the company’s revenue, making Oracle a great bargain AI stock to buy now and hold as the company’s exciting growth story accelerates.
Should I invest $1,000 in Intel right now?
Before you buy Intel stock, consider the following:
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Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $771,034.!*
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a director of The Motley Fool. Adria Cimino owns shares of Amazon and Oracle. The Motley Fool owns shares of and recommends Amazon, Microsoft, NVIDIA, and Oracle. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Forget Nvidia: These 2 AI Stocks are a Great Buy Right Now This was originally published by The Motley Fool
