This artificial intelligence (AI) stock will overtake Nvidia by the end of the year

Nvidia (NASDAQ: NVDA) has run circles around other artificial intelligence (AI) stocks in recent years due to its leadership in the field. The company has an 80% share of the AI ​​chip market, which has helped it generate triple-digit revenue quarter after quarter. As a result, the stock is up more than 2,200% over the past five years.

By comparison, the other top tech peers, incl Apple and Alphabethave seen their shares grow by double or triple digits during that time.

While I expect Nvidia to continue as a winning stock over time, between now and the end of the year, another stock could pull ahead. Investors have worried about Nvidia’s reliance on AI revenue in an uncertain economy and the competition it faces in the chip market. In fact, Nvidia has already lost momentum, falling 12% over the past three months.

So investors could turn to another company that’s benefiting from the AI ​​boom, but also brings in billions of dollars in revenue from other businesses. This player could be more resilient in a difficult or uncertain economy, and my prediction is that this AI stock will overtake Nvidia by the end of the year. Let’s find out more.

This stock is a household name

The stock I predict will beat Nvidia by the end of the year is Amazon (NASDAQ: AMZN). His booming e-commerce business sells essentials, general merchandise and even various gadgets, books and movies. It has become a household name, mostly thanks to its Prime subscription service, with over 200 million members.

That helped Amazon report more than $121 billion in North American and international revenue in its most recent quarter, winning in both areas year over year.

And the company could see more Prime signups in the coming weeks as it plans another Prime Big Deal Days sales event in October. With bargains exclusive to Prime members, these events are known to enhance membership in the service.

Even better, Amazon does well when it comes to member retention. After a 30-day trial last year, 72% of users subscribed to the service, according to Statista.

Regardless of the economy, customers see value in a Prime membership because they can buy essential products at great prices and get fast, free delivery.

In addition to this safe and steady source of income, investors also benefit from growth thanks to Amazon Web Services (AWS), its cloud computing business, and here we will find the company’s strengths in the field of artificial intelligence. AWS offers a wide range of cloud services and has dabbled in AI, selling its own chips at lower prices, premium Nvidia chips, a full-service AI platform known as Amazon Bedrock, and more.

The story continues

Management says it aims to be involved in every level of AI — from chips to power programs to apps.

Amazon’s Profit Generator

All of this helped AWS hit an annual revenue rate of $105 billion this year, especially important because AWS has traditionally been Amazon’s profit driver. In the most recent quarter, AWS operating income accounted for 63% of the company’s total.

Recently, Nvidia’s growth has outstripped that of Amazon and other tech companies and dazzled investors. But as sentiment turns more cautious, investors may turn to companies like Amazon that are involved in AI but are less reliant on it than Nvidia. Right now, both of these players are trading at about the same level at 37 times forward earnings estimates, and Amazon might look like a safer bet for the price.

This doesn’t mean that Nvidia and the AI ​​market won’t deliver on their promises in the coming years; I am confident that any short-term uncertainty in the market will not change this exciting long-term story.

But my prediction is that Nvidia, having recently lost momentum, could leave room for others to advance in terms of share price performance in the coming months. And Amazon is likely to take the lead.

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Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Adria Cimino has positions in Amazon. The Motley Fool has positions and recommends Alphabet, Amazon, Apple and Nvidia. The Motley Fool has a disclosure policy.

Prediction: This artificial intelligence (AI) stock will outperform Nvidia by the end of the year was originally published by The Motley Fool