3 AI Stocks That Can Outperform Nvidia in the Second Half of 2024


  • Investors seeking serious gains may wish to consider the AI stocks that aren’t named Nvidia.
  • Advanced Micro Devices (AMD): The number-two GPU company may not be as far behind as investors think.
  • Super Micro Computer (SMCI): The red-hot data center play could be ready to enjoy a massive comeback.
  • Amazon (AMZN): With generative AI powers coming to Alexa, perhaps Wall Street needs to upgrade their expectations with the stock.
AI stocks - 3 AI Stocks That Can Outperform Nvidia in the Second Half of 2024

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Nvidia (NASDAQ:NVDA) continues to raise the bar on itself and the rest of the AI scene. When the GPU king went into its latest quarterly earnings, a lot of expectation was built in. Additionally, many investors were eager to look for any traces of hair on the quarter.

As it turned out, there wasn’t much negative to get behind, even as the market pulled back a bit on the day NVDA stock blasted to new highs above the $1,000 per share mark. Indeed, it seemed inevitable that Nvidia would surpass the milestone.

Up next, it may be staring down the title of the world’s second-largest company if it’s able to surpass Apple (NASDAQ:AAPL) in market cap. Whether Nvidia hits a $3 trillion market cap amid this post-earnings run remains to be seen. It’s very realistic that the feat can be achieved on the back of its latest blowout.

If the stock’s melt-up has you looking elsewhere, though, look to three AI stocks that could outperform Nvidia in the second half.

Advanced Micro Devices (AMD)

Advanced Micro Devices, Inc. (AMD) logo in the building at CNE in Toronto. AMD is an American semiconductor company.
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If Nvidia is booming, its second-place peer, Advanced Micro Devices (NASDAQ:AMD), looks pretty enticing.

After correction this spring, I actually view AMD stock as a great company. It could add to the recent quarterly AI boom as it looks to stack up against its top rival, Nvidia.

On Friday, AMD stock surged by 3.7% as the broad basket of AI stocks rose at the hands of Nvidia’s magnificent result. Though AMD may fall short in certain benchmarks, AMD’s GPUs are powerful enough to get the job done for many enterprises. As the company pushes ahead, while looking to top its MI300 AI accelerator, AMD certainly stands out.

Looking ahead, the MI400 series of AI accelerators, which could land in 2025, may be able to even the playing field a bit. The MI400 will get many of the same features as Nvidia’s best innovations. AMD’s new interconnect fabric called XSwitch will go up against NVLink as the battle for efficiency gains advances.

Super Micro Computer (SMCI)

Smartphone with webpage of US company Super Micro Computer Inc. (Supermicro) in front of business logo. Focus on top-left of phone display. Unmodified photo. SMCI stock
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Red-hot data center Super Micro Computer (NASDAQ:SMCI) is fresh off a painful springtime plunge. Today, SMCI stock is coming back after shedding nearly 40% at its worst point. Still down around 25% from all-time highs, perhaps the high-flyer is ready to flap its wings again. As we enter the next stage of the AI boom, it could entail greater gains for the firms at the front of the lines.

First, we have the GPU makers themselves, like Nvidia. Next, we have the data center firms that can put these GPUs to work in the most efficient way possible. However, investors should be aware of the risks, as shares are still up more than 1,700% in the past two years. It’s like Super Micro Computer came from out of nowhere!

As Nvidia earnings jolt SMCI stock, I do view SMCI as a very intriguing, albeit risky, bet for those who believe the AI boom is just getting started. Like Nvidia, SMCI stock has been a multi-bagger. But, the stock still doesn’t appear wildly expensive. At writing, Super Micro shares go for a surprisingly low 23.47 times forward price-to-earnings (P/E).

That’s less than some consumer packaged goods companies, which I think makes little sense given Super Micro’s explosive growth prospects.

Amazon (AMZN)

Closeup of the Amazon logo at Amazon campus in Palo Alto, California. The Palo Alto location hosts A9 Search, Amazon Web Services, and Amazon Game Studios teams. AMZN stock
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Magnificent Seven firm Amazon (NASDAQ:AMZN) stands to gain handsomely from the recent AI surge. Though Nvidia has been the most magnificent of the Magnificent Seven, AMZN may have the chops to outdo NVDA stock in the second half. Undoubtedly, Nvidia keeps posting blowout after blowout. Eventually, Wall Street will overshoot on the expectations front, setting the stage for less-than-incredible gains.

For Amazon, I still view expectations as quite muted. The company is betting big on generative AI with Amazon Web Services (AWS). More intriguing, though, is what the $1.89 trillion company could have in store from a consumer software perspective as it brings more advanced AI to Alexa.

Indeed, many homes already have an Alexa-enabled device. As the firm rolls out a paid version of Alexa with generative AI smarts later this year, I think the e-commerce behemoth could be in for an AI upside that could catch Wall Street off-guard. Only time will tell how good AI-powered Alexa will be.

On the date of publication, Joey Frenette held shares of Amazon and Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/3-ai-stocks-that-can-outperform-nvidia-in-the-second-half-of-2024/.

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