Dear Jeff, what is the little stock that everyone is predicting to unseat Nvidia? You spoke about it without its name before you left Brownstone. — Ellen J.
Hi Ellen,
This is a very hot topic these days.
After all, when a company like NVIDIA can achieve a $2 trillion dollar valuation and become the most important semiconductor company in the industry, there are a lot of companies out there trying to become the “next NVIDIA.”
The largest publicly traded company that has been the closest competitor to NVIDIA is Advanced Micro Devices (AMD). AMD was a strong recommendation of mine in my previous publication, The Near Future Report, and not surprisingly, it has done extremely well due to all of the investment in artificial intelligence.
5-Year Chart of Advanced Micro Devices (AMD)
While AMD’s share price has gone to the moon, the company is still a fraction of the size of NVIDIA.
AMD’s valuation is around $290 billion trading at an EV/Sales of 12 compared to NVIDIA at $1.9 trillion with an EV/Sales of 38. This gives us a feel for how much institutional capital has been dumping into NVIDIA purely on momentum.
With that said, the most exciting developments in semiconductors related to artificial intelligence (AI) are actually private companies right now.
We recently explored this topic in Outer Limits — The $7 Trillion Investment of a Lifetime. Towards the end of that issue, I listed out some of my favorite AI-specific private semiconductor companies that are all positioning themselves as the next NVIDIA.
In that issue, we also had a look at OpenAI’s CEO Sam Altman and his plans to raise $7 trillion in order to create a company, or companies, that can compete with NVIDIA and make semiconductor supply chains more resilient.
And just a few days ago in Outer Limits — Softbank’s Next Bold Bet, I wrote about Softbank, its investment in ARM Holdings (ARM), and Softbank’s plan to raise $100 billion to create its own competitor to NVIDIA.
The reality is that there is an incredible amount of capital looking to invest in companies that can compete with NVIDIA. And a handful of them will be successful or get acquired by a larger semiconductor company along the way.
Either way, we’ll plan on being there for the ride…
