Think Nvidia stock is a bubble? Buy these 2 AI stocks instead.

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If the company fails to meet expectations, Nvidia stock could be reckoned with.

The Artificial Intelligence (AI) phenomenon Nvidia (NVDA -3.22%) Recently moved on Microsoft To become the most valuable company in the world. Valued at more than $3 trillion, Nvidia has made incredible gains for investors as sales of its AI chips have exploded.

Despite Nvidia's success, there's a distinct possibility that the stock has reached full-blown bubble territory. Nvidia stock trades for about 40 times sales, well ahead of its lofty valuation at the height of the dot-com bubble. Nvidia needs to continue to grow at incredible rates while maintaining its sky-high profit margins in the face of ever-increasing competition in order to justify the stock's price tag.

Nvidia's nosebleed valuation makes the stock incredibly risky. For investors who want to bet on AI without taking on too much risk, Intel (INTC 1.53%) And Qualcomm (QCOM -1.36%) Looks like a safe bet.

Someone has to make all those AI chips.

Intel sells its own AI accelerators, with the latest being the extremely powerful Gaudi 3. The company's biggest long-term opportunity, though, may be developing AI chips for others.

Intel is eyeing the semiconductor foundry market. The company expects to become the world's second-largest foundry by 2030, and plans to regain manufacturing leadership next year with the launch of its Intel 18A process node. Intel recently began high-volume production of its Intel 3 Node, the first major process offered to Foundry customers. A variant of Intel 3 will target AI chips and similar applications.

Intel has booked more than $15 billion in business to date for its foundry, which spans Intel 3, Intel 18A, advanced packaging services, and its mature Intel 16 node. The most high-profile deal to date is an agreement with Microsoft to develop an unnamed chip on the Intel 18A process. Microsoft designs its own server central processing units (CPUs) and AI accelerators.

It will take time for Intel to ramp up its manufacturing capacity, but the company expects the foundry business to break even in a few years as revenues grow faster. As competition in the AI ​​chip industry intensifies, Intel will be primed to take advantage.


Age of Windows PCs running exclusively on Intel or AMD Processors are officially dead. The first batch of Windows laptops powered by the mighty Qualcomm arm-based CPUs launched this month. A major selling point is the AI-capable processor embedded in each chip, which enables AI features built into Windows and other software.

Arm Holdings has high hopes for the PC market. The company believes that Arm-based PCs will take over 50 percent of the Windows PC market within five years. While this estimate sounds optimistic, arm-based PCs are likely here to stay.

Qualcomm won't be the only player after its exclusivity deal with Microsoft reportedly expires this year. However, the company is the first mover in this market, giving it time to win over consumers with its powerful Snapdragon chips.

It's hard to say whether the addition of AI capabilities will trigger a major PC upgrade cycle. If that happens, Qualcomm-powered PCs will be a viable option for those looking to use AI-powered features. Qualcomm is already a leader in the smartphone chip market, and its entry into the PC market opens up a whole new revenue stream for the company.

While Nvidia has been the biggest AI winner so far, the stock could fall if prices don't meet high expectations. Both Intel and Qualcomm offer low-risk ways for investors to bet on AI.

Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, Nvidia, and Qualcomm. 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.

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