Missed the Boat on Nvidia? Invest in These AI Stocks Instead.

Undoubtedly, numerous artificial intelligence (AI) investors are regretting not capitalizing on Nvidia‘s substantial gains. With the stock surging 280% in the past year and over 1,800% in five years, it stands out as one of the primary beneficiaries in the AI sector.

Nevertheless, Nvidia is not the sole AI stock in the semiconductor industry, and AI encompasses more than just semiconductors. With a wide array of AI investment opportunities, the sector is poised to continue offering potential. Three contributors from Fool.com have suggestions on where AI investors can shift their focus to next: Amazon (NASDAQ: AMZN), The Trade Desk (NASDAQ: TTD), and Tesla (NASDAQ: TSLA).

Amazon holds various avenues for success in the realm of AI

Jake Lerch (Amazon): While there are more popular AI stocks available, Amazon remains a compelling option that warrants attention and investment. Here’s why:

Firstly, the corporation ranks as the leading cloud services provider. Amazon Web Services (AWS) commands an estimated 31% share of the global cloud services market. This is crucial as new generative AI tools and applications heavily rely on cloud services like AWS. As the AI revolution continues to progress, Amazon is well-positioned to benefit due to its dominance in the cloud infrastructure sphere.

Furthermore, Amazon’s extensive e-commerce sector aligns harmoniously with a multitude of AI applications. For instance, the company has introduced Rufus, a cutting-edge AI-fueled shopping aide that assists users by addressing queries, facilitating price comparisons, and generating product recommendations.

Additionally, Amazon implements AI across various other facets of its operations, such as:

  • Optimizing prescription drug delivery time and expenses through Amazon Pharmacy.

  • Reducing the company’s environmental footprint by utilizing AI-driven recommendations to minimize packaging usage.

  • Enhancing shopping suggestions via Amazon Fashion.

  • Enhancing Alexa-enabled devices to improve interactions and dialogue between users and Alexa.

In addition to these initiatives, Amazon remains among the finest-managed companies globally. Shares have surged by 73% over the previous 12 months, while revenue growth has rebounded to a robust 13%.

In essence, Amazon stands as a wise choice for investors focusing on AI.

The Trade Desk leverages AI and digital advertising trends

Justin Pope (The Trade Desk): Artificial intelligence has been a prominent theme lately, especially in the advertising domain where The Trade Desk became a disruptive force several years ago. Brands and businesses can purchase advertisements on The Trade Desk’s platform, which applies AI and user data to match ads with potential customers. This approach proves far more effective than traditional advertising methods that target broader audiences across television, radio, or print media.

The Trade Desk has flourished, witnessing profitable growth since its initial public offering in 2016. The company’s strategic position in the industry plays a key role in its success. As advertising spending shifts towards digital platforms, The Trade Desk distinguishes itself from competitors like Meta Platforms and Alphabet through enhanced transparency, thereby attracting a larger customer base.

TTD Revenue (TTM) ChartTTD Revenue (TTM) Chart

TTD Revenue (TTM) Chart

Global ad expenditure in 2023 was estimated at $830 billion, with The Trade Desk’s $9.6 billion gross ad spend translating to just over 1% of market share. This leaves ample room for growth for a company operating independently from the closed ecosystems of major tech firms.

The Trade Desk’s long-term growth prospects and profitable business model make it an obvious AI investment that can be beneficial in the long run.

Tesla holds potential AI-driven surprises

Will Healy (Tesla): While most view Tesla as an automobile manufacturer, it actually comprises a diverse portfolio encompassing battery tech, solar energy solutions, and breakthroughs in AI.

Distinct from relying on chip manufacturers like Nvidia, Tesla has pioneered its own semiconductor and robotics solutions. Among these innovations are the Dojo chip, catering to neural networks, and the FSD (full self-driving) chip designed for fully autonomous vehicles.

CEO Elon Musk aims to introduce a robotaxi business based on Tesla’s tech. Analysts at Cathie Wood’s Ark Invest anticipate Tesla’s revenue could potentially soar to at least $600 billion by 2027 through robotaxis, representing over seven times the 2023 figure of $82 billion.

Wood projects that this growth could propel Tesla’s stock price to $2,000 per share, translating to a more than tenfold increase from current levels.

While this forecast may appear bold, and Musk is renowned for setting lofty goals, Wood predicted a split-adjusted price target of $267 per Tesla share in 2018 which came to fruition in less than three years. Therefore, her projections may hold weight.

Notably, Tesla’s stock price has fallen as the company slashed EV prices to boost sales and remain competitive amid emerging rivals. This negative sentiment has lowered Tesla’s P/E ratio to 45, an uncommonly low valuation compared to historical levels.

Although profit projections indicate a 1% decline this year, analysts forecast a 36% surge in 2025. These forecasts lend credence to Wood’s outlook. Some of this optimism ties back to the anticipated launch of the budget-friendly Model 2 EV in 2025 and investor interest in Tesla’s AI and self-driving capabilities.

Considering an investment of $1,000 in Amazon right now?

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Randi Zuckerberg, former market development director and spokesperson for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. John Mackey, ex-CEO of Whole Foods Market, an Amazon subsidiary, is also on The Motley Fool’s board. Suzanne Frey, an executive at Alphabet, is a board member. Jake Lerch holds positions in Alphabet, Amazon, Nvidia, and Tesla. Justin Pope does not hold any positions in the mentioned stocks. Will Healy is invested in The Trade Desk. The Motley Fool has interests in and recommends Alphabet, Amazon, Meta Platforms, Nvidia, Tesla, and The Trade Desk. The Motley Fool maintains a disclosure policy.

Missed Out on Nvidia? Buy These Artificial Intelligence (AI) Stocks Instead. was originally published by The Motley Fool

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