Here are 3 other artificial intelligence (AI) stocks to buy instead

By | March 26, 2024

Certainly, Nvidia is on fire. The stock is up a whopping 1,980% over the past five years – meaning a $10,000 investment in 2019 would be worth as much as $208,000 today.

But as the saying goes, past performance is no guarantee of future results. So let’s take a look at some alternatives to the king of AI stocks. Here are three names I think AI-focused investors would be wise to consider.

A hand hovers over a holographic stock chart.A hand hovers over a holographic stock chart.

Image source: Getty Images.

Advanced micro devices

Stands first Advanced micro devices (NASDAQ: AMD). Granted, AMD may not have achieved the same level of AI buzz as its competitor Nvidia, but the company is benefiting from the AI ​​revolution in the same way. AMD shares are up 179% since January 2023.

Like Nvidia, AMD is designing advanced semiconductors that can be used to train large language models. The latest AI-focused offering is the MI300X chip, unveiled in December 2023. So far MicrosoftOpenAI and Metaplatforms have all expressed interest in using the chip, which offers an alternative to the current AI workhouse, Nvidia’s H100 chip.

The MI300X could help AMD gain a major position in the AI ​​accelerator market, especially considering its cost. It sells for around $10,000 to $15,000, well below the H100’s price of $40,000.

With the first deliveries of the MI300X taking place, it will be some time before we see what demand for the chip looks like. However, AMD Chief Executive Officer (CEO) Lisa Su has expressed optimism, both for the MI300X and the overall AI market. In December, she predicted that the market for AI chips would reach $400 billion by 2027, up from about $40 billion in 2023. If her prediction is even remotely accurate, AMD investors will have a lot to smile about in the coming years.

Oracle

The following is Oracle (NYSE: ORCL)an under-the-radar AI stock if ever there was one.

The company is probably best known as one of the classic “tech bubble” stocks of the early 2000s. The database software giant’s shares soared during the first wave of Internet adoption in the late 1990s, before crashing during the 2001-2003 bear market. 84% plummeted.

Nevertheless, Oracle is now back and making a success of its data center business. In its most recent earnings report (for the three months ended February 29, 2024), Oracle exceeded expectations, highlighted by:

  • $13.3 billion in total revenue, up 7% year over year

  • $5.1 billion in cloud revenue, up 25% from a year ago

  • $2.4 billion in net income, up 27% from a year earlier.

Additionally, the company increased forward guidance. Chief Financial Officer (CFO) Safra Catz struck a very optimistic note, saying the company is likely to exceed its target of $65 billion in annual revenue by 2026. Furthermore, chairman Larry Ellison emphasized that rising spending from hyperscalers like Microsoft is moving. Oracle’s needle.

In short, the AI ​​wave is helping Oracle find its mojo again – and investors should take note.

Palantir Technologies

Last one is Palantir Technologies (NYSE:PLTR)the company at the forefront of AI-driven big data analytics.

Some investors may find Palantir’s business model difficult to understand. In short, Palantir helps organizations carry out their activities more efficiently. The company does this through multiple AI-powered software platforms that analyze massive data sets, recognize patterns and provide solutions.

Financially, it’s clear that Palantir is making wins. The number of customers, revenue, net income and free cash flow are all growing. In addition, the company is beginning to pivot toward the private sector, having derived much of its initial revenue from government contracts.

Even now, Palantir generates more revenue from government entities ($1.2 billion in 2023) than from commercial customers ($1.0 billion in 2023).

But that will probably change. Palantir’s commercial revenues are growing about 20% year over year, while government revenues are growing 14%. If this trend continues, Palantir’s commercial revenues will surpass government revenues by 2027.

In any case, investors should not sleep on Palantir. The company’s rapid growth means it could become the next big name in AI investing.

Should You Invest $1,000 in Palantir Technologies Now?

Consider the following before purchasing shares in Palantir Technologies:

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Jake Lerch has positions at Nvidia. The Motley Fool holds positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, Oracle, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.

Forget Nvidia: Here Are Three Other Artificial Intelligence (AI) Stocks to Buy was originally published by The Motley Fool

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