Even with all the excitement surrounding it, the AI revolution is still in its early stages. Given that the AI sector was worth $189 billion in 2023, the UN predicts it could surge to a massive $4.8 trillion valuation by 2033.
Companies like
Nvidia
Have already capitalized on this expansion, reaching multitrillion-dollar market capitalizations. However, the following two artificial intelligence enterprises are valued at only a fraction of that amount. In the long run, though, it’s possible that one of these stocks might outpace Nvidia’s market cap, resulting in substantial returns for those who remain committed investors.
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This quality is what sets Nvidia apart from others.
Currently, most assessments suggest that Nvidia holds anywhere from 70% to 95% of the AI graphics processing unit (GPU) market. These GPUs play an essential role in both training and running AI models, along with supporting numerous other machine learning activities. Absent a GPU, this would not be feasible.
GPUs
The AI revolution wouldn’t be expanding to this extent without such significant growth. Currently, Nvidia leads in selling GPUs specifically designed for artificial intelligence tasks.
Two factors set Nvidia’s GPUs apart: their early entry into the market and vendor lock-in via their development toolkit known as CUDA.
Back in 2006, Nvidia’s leaders saw the significance of having programmable infrastructure. They realized that developers would seek ways to tailor their chips to enhance specific functions, enabling quicker and more efficient data processing compared to standard GPUs. In response to this insight, Nvidia introduced CUDA—Compute Unified Device Architecture—which unleashed the capabilities of parallel computing. As a result, Nvidia’s chips became more appealing due to their superior potential for performance tuning over those offered by competitors.
Currently, numerous Nvidia clients utilize Nvidia’s products because of CUDA. These clients have tailored their software configurations specifically to work well with Nvidia’s hardware, leading industry experts to refer to this phenomenon as “vendor lock-in.” This situation has allowed Nvidia to secure between an 80% and 95% share of the GPU market related to artificial intelligence applications. Competing against such a dominant position seems challenging. However, I believe some other semiconductor manufacturers could soon disrupt this status quo. The firms listed below represent my picks based on the balance they offer between risk levels and possible gains.
Two shares that might ultimately outperform Nvidia.
The journey to surpassing Nvidia will be lengthy. However, over the next several years, I believe that either
Intel
(NASDAQ: INTC)
or
Advanced Micro Devices
(NASDAQ: AMD)
could break through.
AMD may be ideally situated to challenge Nvidia’s supremacy in artificial intelligence over the coming half-decade. Their most recent graphics processing units have shown strong performance when compared to Nvidia’s Blackwell chips during testing benchmarks. Moreover, Nvidia is struggling to produce sufficient quantities of chips to satisfy market needs, resulting in extended delivery wait times spanning several months. This situation provides AMD with an opportunity to swiftly address escalating demand, even though their offerings might technically be considered slightly lesser quality but come without as much vendor restriction.
NVDA PS Ratio
data by
YCharts
Right now, Intel is far behind AMD in terms of catching up with Nvidia. But its market cap and valuation more than reflect that reality. Intel is valued at just $80 billion versus a $140 billion valuation for AMD. Meanwhile, Intel shares trade at just 1.5 times sales versus a 5.6 times sales valuation for AMD. Betting on Intel reaching Nvidia’s valuation by 2030 is clearly a long shot. But the company is investing heavily to improve its chips’ competitiveness, as well as its overall manufacturing capacity. And late last year it received a multibillion-dollar contract from
Amazon
For AI chipsets and another multibillion-dollar deal with the U.S. military.
Today, I’m placing my bet on AMD to close the gap with Nvidia. The company’s chip performance and production abilities significantly surpass those of Intel when it comes to AI GPUs. With 52% of its income derived from data centers compared to Intel’s mere 25%, AMD appears far better positioned within the AI sector than Intel does. Despite this, Nvidia’s CUDA architecture will likely continue as an obstacle for rivals over the next several years. However, considering how undervalued both AMD and Intel appear relative to their peers, they could be worthwhile speculative investments at these prices—though catching up to Nvidia by 2030 remains unlikely.
Is it wise to put $1,000 into Advanced Micro Devices at this moment?
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Ryan Vanzo
has no holdings in any of the aforementioned stocks. However, The Motley Fool holds stakes in and endorses Advanced Micro Devices, Intel, and Nvidia. Additionally, they recommend the option to sell short Intel’s May 2025 $30 call contracts. The Motley Fool also has a
disclosure policy
.
