Nvidia (NASDAQ: NVDA) became a Wall Street darling last year when it cornered the market on artificial intelligence (AI) chips and earned its spot in the “Magnificent Seven,” a phrase used to describe the seven most prominent tech companies. As a result, the company’s stock is up 242% since last March, almost entirely based on excitement over its AI prospects.
With the industry projected to expand at a compound annual growth rate (CAGR) of 37% until at least 2030, it’s no wonder investors have flocked to the market. However, plenty of companies are moving into AI and could have more room to run than Nvidia or might be trading at a better value than the chipmaker.
Consequently, it’s a good idea to look for alternative ways to invest in the budding sector. Other companies in the Magnificent Seven are an excellent place to start, with many known for their reliability over the long term and heavy investment in AI.
So forget Nvidia. You’ll regret not buying these Magnificent Seven stocks instead.
1. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) CEO Sundar Pichai describes the company as seven years into its “journey as an AI-first company.” This year, a poor debut for its new large language model Gemini created doubt over its potential in the industry. However, the company remains a behemoth in tech, with significant cash reserves that will likely see the company retain its dominance and eventually catch up to its AI rivals.
In-house brands like Android, YouTube, Chrome, and Google have granted Alphabet a powerful position in tech. These brands attract billions of users and have helped the company’s annual revenue rise 90% in the last five years, with operating income up 135%. Meanwhile, Alphabet’s many products create almost endless opportunities to boost its business with AI.
Improving Gemini could see Alphabet offer more effective advertising, develop a search experience closer to OpenAI’s ChatGPT, better analyze viewing trends on YouTube, and expand its AI cloud services on Google Cloud.
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NVDA PE Ratio (Forward) Chart
The chart above shows Alphabet’s stock is trading at a significantly better value than Nvidia’s, with a far lower forward price-to-earnings ratio (P/E) and price-to-free-cash-flow…
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