Forget Nvidia: This might be a better AI stock to buy right now

Nvidia (NVDA 8.15%) it now has a market capitalization of about $2.5 trillion, making it one of the most valuable companies in the world. The stock has enjoyed an incredible run over the past two years, and while it has fallen in recent weeks, it’s still up 115% since January.

While there’s plenty of opportunity for the artificial intelligence (AI) chipmaker’s business to grow, as it’s now trading at such a high valuation that it could take some time for investors who buy it today to realize a high return from actions.

That’s why it’s worth considering other AI stocks that may have more upside and benefit from strong demand for Nvidia’s AI chips. One such stock that looks like an undervalued AI investment is today Dell Technologies (DELL 2.03%).

Dell’s server business is booming

Computer maker Dell reported some remarkable sales numbers in the second quarter of fiscal 2025. And what was remarkable was that the strong results were not due to increased sales of personal computers (PCs). Instead, there was strong demand for its servers.

In the period that ended Aug. 2, Dell’s net income rose 9 percent year over year to just over $25 billion. And the top line could have been even better if not for its slow performance outside of its server work. During the quarter, the company’s server and networking revenue rose 80% to $7.7 billion. These declines were offset in the core customer solutions group, where sales fell 4%.

The company is seeing increased demand for its servers as companies look to find ways to handle larger workloads thanks to artificial intelligence. Here Dell has a great opportunity to continue to grow its server sales at a high rate.

Its results could be even better

Dell’s numbers were good last quarter, but I’m optimistic they can get even better. Upgrade cycles could be coming for notebooks and PCs as consumers and business customers look to take advantage of AI-powered machines. Research company Gartner predicts that by the end of 2026, AI PCs will account for all enterprise PC purchases. This year, around 22% of PC shipments are expected to be powered by AI.

Once demand for PCs and notebooks picks up again thanks to this AI tailwind, Dell’s overall growth rate could accelerate rapidly. The company could grow at double-digit percentage rates once it fires on all cylinders with more AI-related growth catalysts.

Dell might be a better buy than Nvidia right now

Nvidia and Dell are both potentially good stocks to buy and own if you’re bullish on AI. But Dell trades at just 13 times the company’s expected future earnings (based on analysts’ expectations) — a much cheaper valuation than Nvidia, which trades at more than 36 times next year’s earnings.

Dell could also be on the verge of much better growth numbers in the near future, and buying the stock before that happens could set investors up for some fantastic long-term returns. It may take some patience given the possibility of a recession in the near future, but Dell could be a great AI stock to buy and own right now.