Nvidia (NASDAQ: NVDA) has dominated the AI stock market, boasting an 80% share in AI chips and experiencing phenomenal revenue growth. Over the last five years, Nvidia’s stock has skyrocketed by over 2,200%, outshining other tech giants like Apple and Alphabet.
Despite Nvidia’s impressive track record, concerns loom over its reliance on AI revenue amid an uncertain economic landscape and fierce competition in the chip sector. Recent months have seen Nvidia’s stock dip by 12%, indicating a potential shift in investor sentiment.
Stepping into the limelight of AI performance is another key player, a company poised to outshine Nvidia by the year’s end. This AI stock capitalizes on the AI boom while deriving billions in revenue from diversified business streams, making it a more resilient choice in turbulent times. Let’s delve deeper into this rising star.
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The Iconic Brand Leading the Pack
The anticipated victor surpassing Nvidia is Amazon (NASDAQ: AMZN). Renowned for its robust e-commerce platform offering essentials, consumer goods, digital content, and a myriad of services, Amazon has cemented itself as a household name. Notably, its Prime subscription boasts over 200 million loyal members.
In its latest financials, Amazon disclosed revenue exceeding $121 billion from its North American and international operations, showcasing a notable YoY increase in both segments.
Anticipated Prime Big Deal Days event in October may further bolster Prime memberships, a move historically associated with membership upticks. Amazon’s impressive 72% retention rate for trial subscribers, as reported by Statista, underscores the value customers see in the service.
Beyond dependable revenue from e-commerce, Amazon’s growth story is augmented by Amazon Web Services (AWS). Boasting a revenue run rate of $105 billion this year, AWS stands as a cornerstone profit driver for Amazon, contributing 63% to the company’s total operating income last quarter.
Driving Amazon’s Profits
AWS’s stellar performance, coupled with Amazon’s diverse business model, places it in pole position to potentially outpace Nvidia in the AI stock game. While Nvidia has been the poster child for tech growth recently, investors are starting to look at entities like Amazon with AI involvement but less dependence on it. With both companies trading at similar forward earnings estimates, Amazon emerges as a safer bet in the eyes of many investors.
This isn’t to discount Nvidia’s role in the AI realm; the market shows promising signs for both. However, a short-term shift might pave the way for Amazon to lead in share price performance in the coming months, capitalizing on Nvidia’s recent wane.
3 Reasons to Invest in Amazon Now
For potential Amazon investors, it’s vital to note that while Amazon is poised for success, it may not align with all stock advisory recommendations. The market is ripe with opportunities, and Amazon stands as a sturdy contender for substantial returns.
Reflecting on Nvidia’s history-making growth that brought massive returns to investors, it’s intriguing to ponder Amazon’s trajectory, hinting at a potential windfall. The prudent investor shouldn’t underestimate the power of strong investments over the long run.
Embrace the market’s dynamism, explore investment prospects cautiously, and consider the growth potential of companies like Amazon as they chart their course in the ever-evolving AI landscape.
*Stock Advisor returns as of September 3, 2024.