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from Nvidia (NASDAQ:NVDA) Microsoft shares have soared 154% this year, with their performance largely driven by seemingly insatiable demand for their GPU chips amid the proliferation of ai technology.
But Nvidia isn't necessarily the only option for profiting from the chip. Feeding frenzy. Which brings us to today's SA Asks investment question: What is a good alternative stock to Nvidia?
We asked South African analysts Jonathan Weber, Michael Del Monte, Uttam Dey and Jere Wang of JR Research for their picks.
Jonathan Weber: I think Taiwan Semiconductor Manufacturing Company (TSM) is a great alternative. It has an excellent market position and advantage, strong growth, and benefits from Nvidia's momentum due to being their manufacturer. Plus, it is significantly cheaper than Nvidia.
Miguel Del Monte: There are several ways to trade this. I prefer to go down a level and pick Oracle (ORCL), Dell (DELL) and Hewlett Packard Enterprise (HPE) as buyers of GPUs for server construction and, in turn, ai factory construction. Premiums are still relatively low, which offers some upside potential from a valuation perspective.
Uttam Dey: Advanced Micro Devices (AMD) has its sleeves rolled up in two key markets it sells into: GPUs for data centers and PCs. On the data center front, it is expected to regain single-digit market share, backed by an impressive product roadmap that now moves to an annual release cycle to match NVDA. The PC and device market is also set to see marginal growth. With revenue expected to grow in the high 15s range and earnings expected to outperform that, AMD could easily see double-digit growth in its stock.
Jere Wang of JR Research: Nvidia is benefiting from the expansion of ai data center infrastructure. It is the market leader by far. However, AMD's ai business is expected to exceed $4 billion this year, compared to almost nothing last year. I think AMD could be seen as an alternative to tap into the ai goldmine.
