Forget AMD: 2 Artificial Intelligence (AI) Stocks to Buy Now

The artificial intelligence (AI) market that took over Wall Street last year shows no signs of abating. Investors are fascinated by the technology’s enormous potential and the soaring revenue growth of the companies leading it.

Chip manufacturers have proven to be one of the best ways to invest in this sector. These companies are developing hardware to enable the AI ​​market as chip demand surged last year.

As a leading chip maker, advanced micro devices‘ (AMD 0.09%) The stock is up 31% in the last 12 months. However, with its rising stock price and the company not yet seeing significant returns on its investments in AI, AMD’s stock is overvalued for now.

Data from YCharts

This chart compares the valuation of three of the biggest names in chips using forward price-to-earnings (P/E) ratios. Each of these companies has growing ventures in the AI ​​space and could enjoy big gains in the coming years as the market develops. However, AMD’s forward P/E, which is the highest of the three companies, suggests that the company’s stock offers the lowest valuation, while the other two companies look like more attractive options for investing in AI.

So forget AMD and consider buying these two AI stocks now.

1. Intel

With repeated hits intel‘S (INTC 2.19%) With shares down about 46% since 2021, the company is undoubtedly a long-term play. However, its forward P/E of 28 could make it one of the most valuable stocks in the AI ​​space, suggesting that now is a good time to invest in a growing business.

Recent headwinds have forced Intel to rethink its business model. The company shifted to a foundry model and began building chip manufacturing plants across the United States. Intel is one of the biggest beneficiaries of the CHIPS Act, which aims to expand U.S. chip manufacturing capacity while reducing technology companies’ dependence on chips. Taiwan Semiconductor Manufacturing Company. Although it will take time and significant investment, this move could boost Intel’s profits for years.

Intel’s focus on manufacturing is promising as the semiconductor foundry market is expected to soon double in size. According to Allied Market Research, the industry recorded spending of $107 billion in 2022 and is expected to reach more than $231 billion by 2032. Meanwhile, Intel has already signed deals with tech giants. microsoft As a chip client.

Moreover, Intel believes its foundry business can position it profitably in the AI ​​space. CEO Pat Gelsinger said in mid-May that the company expects its Columbus, Ohio, plant to become “the AI ​​systems factory for the nation.” Manufacturing could set Intel apart from other chipmakers in the AI ​​space in the long run, with companies like AMD focusing on design rather than production.

In the first quarter of 2024, Intel’s AI and data center segment recorded operating profit of $184 million, a significant improvement from negative $69 million in the year-ago quarter. Meanwhile, Intel Foundry operating profit increased 8% year-on-year.

It will take patience, but Intel is on a growth path you won’t want to miss. The company has significant potential in the AI ​​space and could be a better choice than AMD in the coming years.

2. Nvidia

Even though the stock is up 173% over the past year compared to AMD’s 31%, Nvidia’s low forward P/E suggests the stock is worth more. This is primarily due to Nvidia’s rapid financial growth over the past 12 months.

In the first quarter of 2025 (ending April 2024), Nvidia recorded 262% year-over-year revenue growth and a 690% increase in operating profits. The company benefited from a 427% increase in revenue in its data center segment, reflecting a surge in sales of AI graphics processing units (GPUs).

Nvidia’s stock price has surged 12% since its May 22 earnings release and looks set to rise further. The company’s years of dominance in the GPU space have given it a lead in AI, a lead that doesn’t seem likely to disappear anytime soon.

Intel has cleverly found a niche in manufacturing, differentiating itself from Nvidia. But AMD may have a hard time going against rivals like Nvidia in AI chips.

In addition to the enormous potential of AI, Nvidia has become a popular chip supplier for numerous other industries.

For example, Nvidia CFO Colette Kress said she expects automotive to be “the largest enterprise segment within the data center (segment) this year.” Autonomous driving technology is advancing rapidly, says CEO Jensen Huang. tesla‘s autonomous technology is currently the most advanced system. Tesla’s technology is based on chips from Nvidia, and demand is likely to continue to grow as the auto industry develops.

Nvidia just achieved another quarter of outstanding earnings, suggesting it can continue its current growth trajectory for many years. It’s worth considering the stock right now before it’s too late.