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( from NvidiaNASDAQ: NVDA) has increased 154% this year, a feat largely due to the seemingly insatiable demand for GPU chips as AI technology becomes increasingly popular.
But Nvidia isn’t necessarily the only way to make money on the chip food craze. Which brings us to today’s investment question from SA Asks: What is a good alternative to Nvidia?
We asked South African analysts Jonathan Weber, Michael Del Monte, Uttam Dey and Jere Wang from JR Research for their picks.
Jonathan Weber: I believe Taiwan Semiconductor Manufacturing Company (TSM) is a great alternative. It has an excellent market position and moat, strong growth, and benefits from Nvidia’s momentum as it is Nvidia’s manufacturer. It is also significantly cheaper than Nvidia.
Michael Del Monte: There are a few ways to play the trade. I’d rather go down a level to Oracle (ORCL), Dell (DELL) and Hewlett Packard Enterprise (HPE) as buyers of the GPUs for server builds and in turn for building AI factories. Premiums remain relatively low, which offers some upside potential from a valuation perspective.
Uttam Dey: Advanced Micro Devices (AMD) has rolled up its sleeves in two key markets it sells into: data center GPUs and PCs. In the data center space, it is expected to regain low-single-digit market share, buoyed by an impressive product roadmap that is now moving to an annual launch cycle to rival NVDA. The PC market and devices are also expected to see some marginal growth. With revenue expected to grow in the high teens and earnings expected to outpace that, AMD could easily see double-digit growth for its stock.
Jere Wang from JR Research: Nvidia is benefiting from the buildout of AI datacenter infrastructure. It is the market leader by far. However, AMD’s AI business is expected to exceed $4 billion this year, while last year they made almost nothing. I think AMD can be considered an alternative to ride the AI goldmine.