Two Potential Artificial Intelligence (AI) Shares That Might Experience Their Own Nvidia Boom by 2025

Two Potential Artificial Intelligence (AI) Shares That Might Experience Their Own Nvidia Boom by 2025

In the vibrant world of technology and innovation, AI stocks have been on a rollercoaster ride over the past couple of years, fueled by increasing optimism about the field's potential. One of the most notable success stories in this sphere is the meteoric rise of Nvidia, garnering an astonishing 11-fold increase from its bear market lows in late 2022.

However, as the titan Nvidia squares off against Apple in a quest for the world's largest market cap, there may be juicier returns lurking in the horizon for investors willing to venture into lesser-known territories. Two such untapped gems are worth exploring, potentially setting the stage for their own "Nvidia moments" in 2025.

1. Advanced Micro Devices (AMD)

In any given industry, the top two players often yield the most profitable investments. It's plausible that 2025 could be the year that Advanced Micro Devices (AMD) seizes the crown as Nvidia's top rival in the AI accelerator market.

Although Nvidia emerged as the frontrunner in the AI accelerator market, AMD's track record is noteworthy, featuring a knack for catching up to (and even surpassing) competitors. With CAGR projections reaching 29% through 2030, it's evident that Nvidia might struggle to meet the surging demand. As a result, AMD could seize the opportunity to muscle its way into the market.

In addition, AMD's established presence in the PC, gaming, and embedded chip markets serves as a solid foundation. Although these segments haven't grown as rapidly as the AI accelerator market, they are indispensable elements in the grand scheme of the chip giant.

Nevertheless, the gaming and embedded segments experienced hefty revenue slumps in 2024, hampering AMD's overall growth. However, the data center segment demonstrated remarkable resilience, posting a 107% revenue increase within the same period.

The stock market responded positively to these positive developments, with AMD's share prices increasing by nearly 50% throughout 2024. The company's forward P/E ratio has now slumped to its lowest level in two years, paving the way for potential buyers seeking to capitalize on the data center segment's continued growth.

2. Shopify

Considering the overpopulated landscape of e-commerce platforms, it's uncommon for any single player to experience an "Nvidia moment." However, Shopify has managed to break this mold.

By fast-tracking online store creation with its user-friendly, customizable platform, Shopify swiftly vaulted to the top spot among U.S. e-commerce platforms. The company's commitment to simplicity and versatility has positioned itself as the go-to choice for merchants, with the vast majority of them sticking to the platform due to the significant disruption involved in switching providers.

Shopify's unique value proposition is further bolstered by its merchant services segment, which provides essential ancillary services to online sellers, such as payments, inventory management, online marketing, and customer support.

Moreover, AI plays a crucial role in Shopify's Simplified Online Store Design, Product Placement, Marketing, Customer Support, and Back Office Task Handling, via its Magic AI tool. This AI-driven support system strengthens the company's competitive edge, making it an undeniable preference for merchants.

Grand View Research projects a CAGR of 19% through 2030, indicating that Shopify is poised for sustained growth. In Q1 2024, the company recorded $6.1 billion in revenue, a 23% increase compared to the prior year's figures.

Although Shopify's stock has soared by an impressive 50% in 2024, some investors may view its sky-high P/E ratio (over 100) and P/S ratio (17) with a critical eye. However, the stock's sales multiple remains well below its 2021 levels, signaling attractive growth potential.

In conclusion, both Advanced Micro Devices and Shopify possess strong growth prospects and set the stage for an "Nvidia moment" in the years to come. By focusing on cutting-edge technology, strategic acquisitions, and innovative product offerings, these companies are well-equipped to navigate the rapidly evolving tech landscape and maximize their growth potential.

1. Investors looking for alternative opportunities beyond Nvidia and Apple might consider investing in the 'finance' sector, specifically in companies that specialize in AI and technology. One such company is 'NVIDIA's primary competitor, 'Intel', known for its strong presence in the semiconductor industry.
2. The surge in interest in AI has led to a significant increase in the demand for specific components, such as graphics processing units (GPUs). In fact, the 'money' poured into the AI industry has 'eased' the strain on traditional manufacturers, creating new opportunities for newer players in the market. For instance, 'Tesla', with its focus on self-driving cars and AI chip production, could potentially benefit from this trend, with its stocks 'surpassing' expectations in the coming years.

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