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Microchip and semiconductor stalwart Nvidia (NASDAQ:NVDA) has been the golden child of the market since the rally commenced in autumn 2022. Its meteoric rise has astonished observers with a stunning 695% surge in NVDA stock price since October 2022. Over the past five years, Nvidia’s shares have skyrocketed by a mind-boggling 1,765%. This extraordinary growth has propelled Nvidia’s market capitalization above $2 trillion, securing its place as the third-largest public company globally, following Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
The linchpin of NVDA’s triumph lies in the soaring demand for the company’s chips and semiconductors that power artificial intelligence models and applications. The global hunger for these components has triggered a surge in Nvidia’s sales and profits. In the last quarter of 2023, Nvidia reported a staggering 265% increase in sales year-over-year, coupled with a remarkable 769% surge in profits. Consequently, Nvidia’s earnings reports have evolved into highly anticipated events reverberating across the stock market landscape.
In light of this, the burning question arises – who will dethrone Nvidia? Which contenders are poised to outshine this reigning champion? Here, we unveil three AI stocks that are set to outpace Nvidia and claim the crown.
Reign of Micron Technology (MU)
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The performance of Micron Technology (NASDAQ:MU) is leaving Nvidia in the dust. MU’s stock has surged by 34% in the last month following an announcement of financial results that surpassed Wall Street expectations, buoyed by optimistic forward guidance driven by AI demand. Micron, renowned for its memory and storage products for computers including USB flash drives, reported earnings per share of 42 cents in March, defying analyst estimates of a 25-cent loss.
With revenue reaching $5.82 billion against an anticipated $5.35 billion, the company showcased robust performance. Management attributes this success to the burgeoning AI boom, with increased demand for its memory and storage products globally. Micron’s provision of memory and storage for cutting-edge AI systems worldwide places it on a trajectory of growth. Forecasts predict revenue of $6.60 billion for the just-ended first quarter, surpassing analyst estimates of $6.02 billion.
Bolstered by its post-earnings bounce, MU’s stock has surged by 55% since the year’s inception and more than doubled over the past 12 months.
Eclipse on the Horizon: Advanced Micro Devices (AMD)
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Advanced Micro Devices (NASDAQ:AMD) is breathing down Nvidia’s neck as one of its major competitors. AMD has developed a range of microchips tailored for AI models and applications in an effort to rival Nvidia’s offerings. Last December, the introduction of the “Ryzen 8040” microchip series by AMD promised up to a 60% enhancement in AI applications. These chips are slated for integration into laptops and personal computers.
AMD’s launch of the new MI300X accelerator microchip for data centers and servers, competing directly with Nvidia’s AI data center chips, has garnered interest from companies like Meta Platforms (NASDAQ:META) and Microsoft. Executives anticipate sales of $2 billion from the data center microchips in the current year. Fueled by these developments and solid earnings, AMD’s stock has surged by 87% in the past year, including a 30% gain thus far in 2024.
Ascension of Taiwan Semiconductor Manufacturing Co. (TSM)
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Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) stands as a linchpin in the AI industry, crucial not just to Nvidia but to the entire chip domain. TSMC, responsible for three-quarters (75%) of global microchips, including those designed by Nvidia, possesses a significant role in powering AI technologies. Owing to its strategic importance, TSMC’s stock has surged by 52% over the past year, with a 39% gain year-to-date.
In its recent earnings call, TSMC executives expressed confidence in capturing current and future growth opportunities, especially in the AI realm. TSMC is increasingly focusing on AI chips and semiconductors as it executes a global expansion strategy. The company recently inaugurated its maiden microchip plant in Japan, expanding beyond its native Taiwan. Plans are underway for two new microchip plants in Arizona, representing a $40 billion investment. Over the past five years, TSMC’s stock has more than tripled.
On the day of publication, Joel Baglole maintained long positions in NVDA and MSFT. The views expressed in this article reflect the opinions of the author and are subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for two decades, with experience at publications like The Wall Street Journal, The Washington Post, Toronto Star, as well as financial websites such as The Motley Fool and Investopedia.
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The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.
