Considering a Switch in Investments: Nvidia Alternative Tech Stock to Consider
Everyone's aware that Nvidia (NVDA -1.96%) is a massive player in the stock market, with a staggering $3.24 trillion market cap on January 13, and a high daily trading volume. Unsurprisingly, research from our site shows that Nvidia stock is prominent in many billionaire-led hedge funds. Ten out of sixteen funds, to be exact, listed Nvidia among their top ten holdings.
However, Nvidia wasn't the most popular pick. In this same study, eleven funds named Alphabet (GOOG -1.30%) (GOOGL -1.35%) as a top-10 holding, sharing this spot with Facebook parent Meta Platforms. Despite Alphabet's daily trading volume of $9.2 billion, which is lower than Nvidia's, Alphabet's stock surged by about 35% over the past year, while Nvidia's growth was at 145%.
This information might encourage you to reconsider your Nvidia investments. Maybe it's a smart move to reap some profits from this stock and redirect that cash into Alphabet's parent company. Let's delve into what makes Alphabet so appealing.
Alphabet's Attractive Qualities
Admittedly, there's a lot to cover when it comes to Alphabet's allure. For this article, let's stay focused and keep it simple:
- If you're after digital advertising, there's no better place than Google. This market giant brought in a staggering $258 billion in revenue and $115 billion in operating profits last year – dwarfing Nvidia's numbers.
- Flexibility is one of Alphabet's strong suits. When they changed their name from Google to Alphabet, it was an innovative move that aimed to make investors and customers feel more at ease regarding innovative projects outside of their core search and advertising business. Now, services like Google Cloud and YouTube account for 13% and 11% of their quarterly sales, respectively.
- Alphabet was a pioneer in the AI field before it became the trend it is today. DeepMind, their AI subsidiary, started operations back in 2010 and has been making significant strides in the realm of AI, including creating general AI systems. The success of their AlphaZero chess engine, which taught itself how to play chess, demonstrates their prowess in this field. They continue leading the way in AI research, and the potential for groundbreaking discoveries is immense.
- Alphabet's impressive market value of $2.3 trillion makes it an attractive investment. Although its current P/E ratio is 25.3 and P/S ratio is 6.9, it's still a bargain compared to Nvidia's corresponding ratios.
The Better Investment Choice
While Nvidia's stock will surely continue to generate wealth for shareholders over the long haul, the chances of easy, immediate gains are likely behind us. AI's golden era has had a huge impact on Nvidia, but we can't predict how long it will last or what the future holds for it.
On the other hand, Alphabet began as a single-focused company with Google as its flagship, but it has steadily expanded its horizons. With an eye on the future, it's invested in a variety of promising ventures, which is something I appreciate in a long-term investment portfolio. And let's not forget the affordability of Alphabet shares, which are currently trading at a lower multiple than Nvidia.
In conclusion, although I believe Nvidia's stock has the potential to generate continued growth, Alphabet is the superior investment choice right now. I wouldn't recommend buying more Nvidia shares, but keeping an eye on this stock as opportunities arise wouldn't be a bad idea.
Considering Alphabet's impressive growth of approximately 35% over the past year, compared to Nvidia's 145%, investing some of your money in Alphabet could potentially yield higher returns. Additionally, with Alphabet's lower P/E and P/S ratios compared to Nvidia, it may be seen as a more financially attractive investment opportunity.
