Nvidia (NASDAQ: NVDA) has become a leading symbol of the artificial intelligence (AI) boom, with its stock price soaring 1,800% over the past five years. Today, Nvidia ranks as the second most valuable company in the world.
For investors keen on capitalizing on the AI trend, Nvidia likely tops their lists. However, the fear of missing out on significant past profits might lead to the consideration of alternative investments.
Where should you invest $1,000 now? Our analyst team has revealed their picks for the 10 best stocks to buy right now. Learn More »
Should you overlook Nvidia and consider these two AI stocks instead?
Looking at Strong Alternatives
Investors should consider Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Meta Platforms (NASDAQ: META). These companies control major internet platforms like Google Search, YouTube, Android, Google Cloud, Facebook, Instagram, and WhatsApp, with billions of daily users.
Both Alphabet and Meta are well-positioned in the AI landscape, thanks to their vast user base and advertising clients. They can easily introduce new AI features and gain quick feedback from users, guiding product improvements.
Recent successes, such as AI tools in Google Cloud and AI functions in Google Search, show that their strategies are paying off by enhancing user experience. Furthermore, they possess a wealth of data to refine their language models.
Financially, these companies are robust. They generate substantial profits, allowing for aggressive investment in AI development. Alphabet is set to allocate $75 billion toward capital expenditures this year, while Meta is planning to spend over $60 billion to expand its technical infrastructure.
Spotting Value in AI
With the growing focus on AI and the popularity of technologies like ChatGPT, it’s clear that interest in this field is here to stay. Still, finding value for investment can be a challenge.
That is where Alphabet and Meta stand out. They have reasonable valuations, trading at price-to-earnings (P/E) ratios of 22 and 29, respectively, making them some of the most attractive options among the “Magnificent Seven” tech stocks.
Concerns about Nvidia
It’s important for investors to consider some reasons for caution regarding Nvidia at this time. One such concern is its valuation; shares currently have a P/E ratio of 53, significantly higher than those of Alphabet and Meta.
While Nvidia’s strong earnings growth might justify this premium valuation over the long term, investors should not overlook potential risks that could impact the company’s promising future.
A primary issue is its reliance on a small number of high-volume customers. Major tech companies, termed hyperscalers—like Alphabet, Meta, Microsoft, and Amazon—are among Nvidia’s biggest buyers. While this arrangement has fueled Nvidia’s success, it poses great risk if these companies decide to reduce their orders or pursue self-reliance in GPU production.
In a more dire scenario, an economic downturn could reduce corporate spending on technology significantly. If companies become more cautious about investing in large-scale AI projects, Nvidia could face declining profitability.
While Nvidia’s growth has been impressive, it might be wise to consider investing in Alphabet and Meta for a stake in the AI movement.
Is it wise to invest $1,000 in Nvidia now?
Before deciding to invest in Nvidia, keep this in mind:
The Motley Fool Stock Advisor recently compiled a list of what they see as the 10 best stocks for investors today, notably excluding Nvidia. The selected stocks could yield significant returns in coming years.
Consider the past when Nvidia first appeared on this list on April 15, 2005. Investing $1,000 back then would have turned into $798,425!*
Stock Advisor provides a straightforward guide for investors, offering portfolio management strategies, regular analyst updates, and two new stock recommendations monthly. Since its inception in 2002, Stock Advisor has seen returns more than quadruple those of the S&P 500.*
Learn more »
*Stock Advisor returns as of February 24, 2025
John Mackey, former CEO of Whole Foods Market, which is an Amazon subsidiary, serves on the board of directors for The Motley Fool. Also, Randi Zuckerberg, sister of Meta Platforms CEO Mark Zuckerberg, holds a director position at The Motley Fool. Suzanne Frey, an executive at Alphabet, also serves on the board of directors for The Motley Fool. Neil Patel does not own any of the mentioned stocks. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends long positions in January 2026 $395 calls on Microsoft and short positions in January 2026 $405 calls on Microsoft. Please refer to The Motley Fool’s disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
