Going Missed the Nvidia Train? 2 AI Stocks to Consider Instead
The Nvidia (NVDA) juggernaut continues to roll, as the semiconductor titan crushed Wall Street expectations once again in Q1 of FY 2025 with staggering sales and earnings growth. Nvidia's revenue soared 262% YoY to hit $26 billion, while non-GAAP earnings surged 461% to $6.12 per share. Analysts had anticipated $24.6 billion in revenue and $5.60 per share in earnings.
Wasting no time, Nvidia announced an impressive 150% increase in its quarterly dividend and mentioned that its next-gen Blackwell chips will hit the market earlier than scheduled. Topping things off, their guidance for Q2 revenue stands at $28 billion at the midpoint, set to more than double their Q1 2024 revenue.
If you're looking for alternative investments amidst Nvidia's towering valuation, consider Super Micro Computer (SMCI) and Snowflake (SNOW).
1. Super Micro Computer (SMCI)
The impressive results from Nvidia's AI-focused chips provided a substantial boost to Super Micro Computer. The robust demand for these chips is in high demand by data center operators, with Super Micro's solutions responsible for housing these chips.
During their latest earnings call, Nvidia CFO Colette Kress stated that demand for their current and next-gen chips in 2025 may exceed supply. Such news bodes well for Super Micro, anticipating ongoing demand for its AI-optimized servers and a continuation of its impressive growth.
Super Micro's revenue projection for the current fiscal year calls for a 110% increase from the previous year's $7.1 billion. Similarly, analysts expect their earnings to reach $23.69 per share for FY 2024, which is double last year's total of $11.81. Super Micro may even outpace these forecasts, taking advantage of their upcoming server solutions for Nvidia's Blackwell chips.
Speaking of which, Super Micro reports gigantic orders for servers optimized to accommodate Nvidia's Blackwell processors. These servers are expected to be a notable contributor to the quarter's demand for servers featuring Nvidia's next-gen chips.
At a comparatively attractive valuation with a sales multiple of 4.4 times and a forward P/E multiples of 25, Super Micro is an appealing choice compared to the more expensive Nvidia. With continued growth expected, analysts anticipate Super Micro's earnings will increase at an annual rate of 62% over the next five years.
2. Snowflake (SNOW)
Although Snowflake may not be as popular an AI name as the other two on this list, they certainly have a great deal to offer. Snowflake provides a cloud-based platform designed to help businesses store, organize, analyze, and construct applications using their proprietary data.
Their first Q1 FY 2025 results indicate a positive impact on Snowflake's revenue, posting a staggering 33% YoY increase to $829 million. Additionally, the company increased its full-year product revenue guidance to $3.3 billion, which is significantly higher than the previous $3.25 billion forecast.
It appears Snowflake is positioning AI as a potential growth catalyst for their company. CEO Sridhar Ramaswamy highlighted that AI products have generated strong interest from their customers and helps them deliver AI-powered experiences more efficiently.
Furthermore, Snowflake's aggressive AI infrastructure investments and recent partnership with Nvidia have contributed to their core offerings by providing robust AI-powered solutions for their clients. They have also acquired TruEra to monitor the performance of large language and machine learning models, further propelling their AI capabilities.
Snowflake is currently trading at a 17 times sales multiple. Although this is higher than their previous 24, it still remains cheaper than Nvidia. This could rise as Snowflake continues to develop their AI-focused solutions, suggesting that Snowflake is an excellent potential buy before further growth.
- In the realm of finance, investor interest in Super Micro Computer (SMCI) has surged due to its strong relationship with Nvidia. The robust demand for Nvidia's AI-focused chips has led to Super Micro's solutions being in high demand by data center operators, potentially leading to significant revenue growth for SMCI.
- For those looking to diversify their investing portfolio, Snowflake (SNOW) could be a worthy consideration. Despite not being as widely recognized as some other AI companies, Snowflake's cloud-based platform for data storage and analysis is proving to be a valuable asset, with its first Q1 FY 2025 results showing a significant 33% YoY increase in revenue.
