Microchip and semiconductor concern Nvidia (NASDAQ:NVDA) has led the market ever since the current rally began in autumn 2022. Its run has been incredible. Since October 2022, NVDA stock has increased 695%. The company’s share price has risen an astounding 1,765% over the last five years. The growth has pushed Nvidia’s market capitalization to above $2 trillion and made it the third largest publicly traded company in the world after Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
The key to the success of NVDA stock has been the rising demand for the company’s chips and semiconductors, which are used to power artificial intelligence models and applications. The massive worldwide demand has led to a surge in Nvidia’s sales and profits. For the final quarter of 2023, Nvidia reported that its sales increased 265% from a year earlier and its profits grew 769% year over year. The company’s earnings reports have become a highly anticipated and closely watched event across the entire stock market.
So who will be the next Nvidia? Which companies are positioned to steal its crown? Here are three AI stocks that will leave Nvidia in the dust.
Micron Technology (MU)
Shares of Micron Technology (NASDAQ:MU) are running circles around Nvidia right now. MU stock has risen by 34% in the past month after the company announced financial results that beat Wall Street forecasts and provided upbeat forward guidance driven by AI demand. Micron, which makes memory and storage for computers and specializes in USB flash drives, announced in March earnings per share of 42 cents compared to a loss of 25 cents that was expected among analysts who cover the company.
Revenue amounted to $5.82 billion versus $5.35 billion, which was expected on Wall Street. Management said the company is benefitting from the current AI boom, with demand for its memory and computer data storage products rising. Micron provides memory and storage for new AI systems around the world. Looking ahead, executives said they expect to report revenue of $6.60 billion for the just-completed first quarter, which is above the $6.02 billion that was expected by analysts.
Thanks to its post-earnings bounce, MU stock has now been up 55% since the start of this year and has more than doubled over the last 12 months.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is nipping at Nvidia’s heels. One of its most direct competitors, AMD, as the company is known, has developed a series of microchips specifically for AI models and applications that it hopes will rival Nvidia’s chips and semiconductors. Last December, AMD unveiled a new series of microchips called the “Ryzen 8040” that are aimed at boosting AI applications by up to 60%. Those new chips will be incorporated into laptops and personal computers (PCs).
AMD has also launched the new MI300X accelerator microchip that’s used in data centers and servers and competes against Nvidia’s AI data center chips. Companies ranging from Meta Platforms (NASDAQ:META) to Microsoft have been buying up the MI300X chips, and AMD executives have said that they expect the data center microchips to generate $2 billion in sales for all of this year. The new AI microchips and decent earnings have AMD stock up 87% over the last 12 months, including a 30% gain so far in 2024.
Taiwan Semiconductor Manufacturing Co. (TSM)
Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) is arguably the most important company to Nvidia and the entire AI industry. This is because TSMC, as the company is popularly known, makes three-quarters (75%) of the microchips in the world, including those designed by Nvidia, as well as nearly all the chips and semiconductors that power AI technologies. The growing importance of TSMC to the AI and chip industries has its stock up by 52% in the last year, including a 39% year-to-date gain.
During their most recent earnings call, TSMC executives said that the company is well-positioned to capture current and future growth opportunities, especially related to AI. Taiwan Semiconductor is increasingly focused on AI chips and semiconductors as it executes a global expansion plan. The company recently opened its first microchip plant in Japan, moving beyond its home market in Taiwan. It is also developing two new microchip plants in Arizona at a cost of $40 billion. TSM stock has more than tripled over the last five years.
On the date of publication, Joel Baglole held long positions in NVDA and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
