Should You Forget Nvidia and Buy 2 Other Artificial Intelligence (AI) Stocks Instead? | The Motley Fool

Nvidia (NVDA 2.21%) is officially the largest company in the world by market capitalization. The computer chipmaker that dominates the artificial intelligence (AI) field has grown at an insatiable rate over the last few years, making investors rich in the process.

That does not mean it will repeat over the next few years. Today, Nvidia trades at a premium price-to-earnings (P/E) ratio, faces competition from its own customers, and relies solely on the growth of AI infrastructure spending to keep the party going. This makes the stock a risky bet for investors at its current market cap of $4.6 trillion.

Is it time to forget Nvidia and buy some other AI stocks instead?

Amazon’s large capital investments

First up is Amazon (AMZN 0.39%). The technology giant is one of Nvidia’s largest customers, spending a boatload of money each year on AI-related computer chips for its cloud infrastructure business, Amazon Web Services (AWS).

While Amazon will still remain an Nvidia customer, it has begun diversifying its chip procurement by developing in-house brands. Specifically, AWS is working closely with the fast-growing AI start-up Anthropic to build data centers using these in-house chips, slowly pushing Nvidia out as its preferred chip provider. This will save Amazon money while also potentially producing a headwind for Nvidia over the next few years.

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