Forget NVIDIA: Buy These 3 Stocks Instead

NVIDIA (NASDAQ: NVDA) is one of the biggest tech names on the market. It’s also been one of the most explosive, as measured by both stock performance and market cap. At $4.4 trillion, it’s now the largest publicly traded company in the world. And since the start of the year, shares of the tech giant rocketed from about $135 to a current price of $182.02.

It, like most AI-related names, is also benefiting from an increase in CAPEX from other tech giants fighting for a piece of the AI pie. For example, Alphabet just announced it will boost its capital-expenditure forecast for the year to $85 billion from $75 billion.

Even better, Meta Platforms (NASDAQ: META), Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT) intend to spend about $320 billion on AI technologies and data centers this year, as compared to the $230 billion capex in 2024.

Granted, NVIDIA is a solid opportunity, but it’s getting pricey. So, until it does cool off, let’s look at two other stocks and one ETF that could have similar success.

Advanced Micro Devices 

Advanced Micro Devices (NASDAQ: AMD) continues to be a must-own AI stock. Since bottoming out at around $76.48, AMD is now up to $180.95 and could test $200 shortly. Fueling upside, analysts at Mizuho just raised their price target on AMD by $22 to $205, with an outperform rating.

Helping, the company is exposed to a multi-billion-dollar addressable market for data center AI chips. In fact, according to company Chair and CEO Lisa Su, the addressable market for AI chips will reach $500 billion by 2028, which is up from her prior estimate for $400 billion by the time 2027 rolls around.

Plus, the company’s latest generation of AI chips, the MI300, is its fastest ramping product ever. Lisa Su added that AMD’s MI300X chip, which rivals dominant AI chipmaker Nvidia’s H100, is “the most advanced AI accelerator in the industry,” as noted by Time.com.

SoundHound AI 

SoundHound AI (NASDAQ: SOUN), a $6.74 billion voice AI company, is just starting to explode higher.  Since bottoming out in April at around $6.52, SOUN is now up to $16.54. From here, we’d like to see the stock initially retest $23 a share.

Its earnings also suggest SOUN may be one of the most underappreciated AI stocks on the market. In its most recent quarter, the company just posted an EPS loss of three cents, which beat by two cents. Revenue of $42.7 million, up 217.2% year over year, beat by $9.82 million.

The company also raised its guidance to a range of $160 to $178, as compared to its prior outlook for $157 million to $177 million.

Also, analysts at Wedbush reiterated an outperform rating on the stock with a price target of $16, noting, “”Overall, we believe this was a major step in the right direction for the SOUN story, with strong demand heading into FY25 across all verticals as the company remains an under-appreciated pure-play AI company that is making significant strides in taking share across all verticals,” said the firm, as quoted by Seeking Alpha.

Analysts at Ladenburg Thalmann upgraded SOUN to a buy with a price target of $16 from $9.

“We continue to view Voice as one of the key early applications for AI systems,” Mattson added. “The company is a leader in this space and is adding significant utility for enterprises looking to adopt AI functionality,” added the firm, as also quoted by Seeking Alpha.

Global X Artificial Intelligence & Technology ETF

If you want to diversify at a lower cost, there are ETFs like the Global X Artificial Intelligence & Technology ETF (NASDAQ: AIQ). With an expense ratio of 0.68%, the ETF invests in companies that potentially stand to benefit from the further development and utilization of artificial intelligence (AI) technology. 

Some of its top holdings include Palantir (NYSE: PLTR), Oracle (NYSE: ORCL), Broadcom (NASDAQ: AVGO), Netflix (NASDAQ: NFLX), NVIDIA, Microsoft and Meta Platforms, to name of few of its 86 total holdings. Since bottoming out in April at around $31, the AIQ ETF is now up to about $45. From here, we’d like to see the AIQ ETF closer to $60.

An ETF like the AIQ should push aggressively higher – especially as demand for artificial intelligence grows and impacts just about everything. Even better, according to Grand View Research, the global AI boom could grow from about $137 billion in 2022 to more than $1.81 trillion by 2030.

And, according to Jensen Huang, founder and CEO of NVIDIA, “AI will be mainstream in every application for every industry. Placing an AI supercomputer on the desks of every data scientist, AI researcher, and student empowers them to engage and shape the age of AI.”

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