While Nvidia (NASDAQ:NVDA) stands as an industry behemoth in the chip and semiconductor sphere, a trio of emerging players are positioning themselves to challenge its dominance. The current market rally, which commenced in autumn 2022, has showcased Nvidia’s meteoric rise, with its stock soaring by a remarkable 695% since October 2022 and an astonishing 1,765% over the past five years. This surge has catapulted Nvidia to a market capitalization exceeding $2 trillion, propelling it to the third spot among the world’s largest publicly traded companies, trailing only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
The linchpin of Nvidia’s success lies in the ever-increasing demand for its chips and semiconductors, particularly in powering artificial intelligence models and applications. The global hunger for these products has led to a substantial uptick in Nvidia’s sales and profits, as showcased in its recent quarterly report. Nvidia disclosed a phenomenal 265% surge in sales year-over-year for the final quarter of 2023, coupled with a staggering 769% growth in profits during the same period. The anticipation surrounding Nvidia’s earnings reports has transcended beyond typical investor interest, capturing the collective attention of the entire stock market.
Looking beyond Nvidia’s towering presence, a new cohort of AI stocks is primed to shake up the current landscape, threatening to eclipse the incumbent titan. Let’s delve into the rise of three such contenders.
Rapid Ascent: Micron Technology (MU)
Amidst the flurry of recent developments, Micron Technology (NASDAQ:MU) has emerged as a force to be reckoned with, significantly outpacing Nvidia’s trajectory. MU stock witnessed a 34% surge in the past month following a stellar earnings announcement that surpassed Wall Street estimates, accompanied by optimistic forward guidance buoyed by AI-related demand. Noteworthy financial figures included earnings per share of 42 cents versus an anticipated 25-cent loss and revenue amounting to $5.82 billion compared to an estimated $5.35 billion. Micron attributes its success to the current AI boom, with a growing appetite for its memory and computer storage products, especially in the realm of AI systems globally. Projecting ahead, Micron anticipates reporting revenue of $6.60 billion for the recently concluded first quarter, surpassing analysts’ expectations of $6.02 billion.
Following its post-earnings surge, MU stock has surged by 55% since the onset of the year, doubling in value over the past 12 months.
Challenger on the Horizon: Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) emerges as a formidable contender nipping at Nvidia’s heels. One of Nvidia’s primary rivals, AMD has engineered a suite of microchips tailored for AI models and applications, poised to challenge Nvidia’s offerings. In a noteworthy unveiling last December, AMD introduced the “Ryzen 8040” series of microchips designed to amplify AI applications by up to 60%, destined for integration with laptops and personal computers. Additionally, AMD launched the new “MI300X accelerator microchip,” targeted at data centers and servers to vie against Nvidia’s AI-centric data center chips. Noteworthy clients ranging from Meta Platforms (NASDAQ:META) to Microsoft have expressed interest in the MI300X chips. Executives at AMD project that the data center microchips will yield $2 billion in sales for the ongoing year. Propelled by these new AI-centric offerings and strong financial performance, AMD stock has surged by 87% over the last 12 months, with a 30% uptick thus far in 2024.
Pioneering the Future: Taiwan Semiconductor Manufacturing Co. (TSM)
Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) emerges as a linchpin in the AI and chip industry ecosystem. Renowned for producing three-quarters of the world’s microchips, including those devised by Nvidia, TSMC commands a dominant position in powering AI technologies with its array of chips and semiconductors. This pivotal role has propelled TSMC’s stock by 52% over the past year, including a notable 39% increment year-to-date.
In its most recent earnings call, TSMC executives reiterated the company’s strategic readiness to capitalize on present and future growth avenues, particularly in the realm of AI. TSMC’s strategic focus has veered towards AI-centric chips and semiconductors as part of its global expansion blueprint. Notable recent endeavors include the inauguration of its maiden microchip facility in Japan, an extension beyond its native Taiwanese market. Additionally, the company is forging ahead with the establishment of two new microchip plants in Arizona entailing an investment of $40 billion. Over the past five years, TSMC stock has witnessed a remarkable tripling in value.
