Forget Nvidia: 3 Artificial Intelligence (AI) Stocks to Buy Instead

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It's time to start thinking about the winners of the next chapter of the artificial intelligence movement.

There is no denying this technology titan. Nvidia (NVDA 3.55%) Plugging into the artificial intelligence (AI) frenzy over the past 18 months has been a favorite way for many investors. And rightfully so. Its processors form the backbone of most AI platforms.

As is often the case, time and reality are catching up with Nvidia. Competitors are working diligently to close the market share gap, and (because it's already huge) Nvidia's growth is poised to slow. Its shares are also very expensive as measured by some metrics … a premium that has some investors questioning how far it can go in the near future.

Translation: It may be time to start shopping for other ways to invest in the next phase of the AI ​​revolution. Here are three other AI stocks to consider instead of (or at least in addition to) Nvidia.

1. Palantir Technologies

If your experience with (and awareness of) AI is limited to user-friendly chat platforms like OpenAI's ChatGPT, Alphabet's Google Gemini, or MicrosoftOf Copilot, you probably agree that they are smart applications. But creative AI doesn't exactly sound like a technology that should underpin an entire industry.

However, these AI-powered chatbots are far from the only way to commercialize artificial intelligence solutions. There are many marketable AI platforms for industry and enterprises that are built from the ground up to help them make better-informed decisions with mountains of digital data.

enter Palantir Technologies (PLTR -0.34%), the name of a stand-alone AI software (meaning that it is completely dedicated to AI-based decision-making solutions) that is becoming a major player in this young industry. It did $2.2 billion worth of business last year and turned a little over $200 million of that into net income.

That's not a ton of money, especially for a company with a market cap of over $50 billion. However, the key to momentum here is the speed of these results. Analysts expect Palantir's top line to grow at an average of more than 20% per year for the next several years, creating the kind of scale that pushes incumbent companies out of the red and deep black.

Driving this expected growth is the ever-increasing desire for decision-making AI to pay for everything. Technology market research organization Precedence Research predicts that the AI ​​software market will grow at an annual rate of 23% through 2032.

Given that Palantir Technologies already serves a number of high-profile customers, including networking names. Cisco Systemsthe US military, and energy giants ExxonMobilOdds are good that it is already positioned to capture at least its fair share of that growth.

2. IonQ

Silicon-based binary code computing has been around for decades. And it has evolved considerably as the tasks put upon it become more complex. However, we are reaching a point where ordinary computing hardware can no longer handle the kind of software experts are able to imagine and then create. Quantum computers, which use subatomic particles instead of silicon to interpret and calculate digital information, are the new frontier of computing. To the extent that this comparison makes sense, quantum computers can be on the order of thousands if not millions of times faster than conventional computers, depending on the task they are performing. This of course has huge implications for AI.

Ion Q (IONQ 1.02%) It is one of a handful of organizations developing such computing platforms. It has already developed and commercialized them, in fact; Now it's just making them better. Its IonQ Tempo platform, still in development, will use an integrated 64 superconducting qubit chip (a central element for the computing functions of quantum computers), versus the IonQ Harmony unveiled in 2020, which built into each chip. Only 11 such quantum particles were found.

However, do not misunderstand. of the world no Waiting for next generation technology. The company already boasts plenty of paying customers and development partners. Lockheed Martin To Microsoft Airbus at Oak Ridge National Laboratory to name just a few. Last quarter's top-line revenue of just $7.6 million was still 77% better than the year-earlier quarter, held back largely by the company's lack of capacity to build systems and offer more services. It is coming, however, in response to demand. Presidency Research predicts that the quantum computing market will expand at a compound annual growth rate of 37% through 2030.

There is more than average risk here, to be sure. That is, quantum computing is still a relatively young science. Its scenario may change considerably in the near and distant future.

The potential reward outweighs the risk though. The current consensus price target for IonQ is $14.98. This is 85% higher than the stock's current price.

3. Apples

Last but not least, add apple (AAPL 2.86%) Add Nvidia to your list of artificial intelligence stocks to buy. It's a proposition that may surprise some investors. While it's the most profitable publicly traded company in the United States for good reason, it's not exactly seen as a major AI player. (Saudi Arabia's state-owned oil company Saudi Aramco is the world's most profitable company.)

That's about to change though. At a February shareholder meeting, CEO Tim Cook pointed out that “every Mac powered by Apple silicon is an extraordinarily capable AI machine. In fact, it's the best AI on the market today.” There is no better computer.” Cook also highlighted Apple's work in generative AI. To that end, he also told the world to look for new AI functionalities from his tech later this year.

What that meant wasn't entirely clear at the time, though details are slowly emerging. In May, for example, reports surfaced that the company was working on its own AI data center processors (rather than relying on third-party chips made by Nvidia). Then, at its annual developers conference this week, the company announced that OpenAI's ChatGPT will soon be able to integrate with new Apple devices. Perhaps most notably, Cook explained that Apple will not collect or store any personal data using its new AI offerings.

At first glance, investors weren't exactly stoked. They were expecting a little more, or at least a little more detail about these and future AI-powered features. But 24 hours later, the stock was trading up 6 percent on the news.

Don't be like those early stock traders and underestimate the potential of what Apple just revealed. This could be exactly what a group of die-hard Apple fans have been waiting for before upgrading their iPhones. As such, don't be surprised to see sales of the bread-winning device finally pick up again. This could be just a glimpse of Apple's larger AI ambitions.

Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. James Brumley has positions in alphabetical order. The Motley Fool has positions in and recommends Alphabet, Apple, Cisco Systems, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends Lockheed Martin. The Motley Fool has a Disclosure Policy.

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