Nvidia is yesterday’s news: These two artificial intelligence (AI) stocks are poised to surge as much as 1,050%, according to Wall Street experts

For most of the past two years, no trend has captured the attention of investors quite like artificial intelligence (AI).

The potential of AI-powered software and systems to learn over time without human intervention gives this technology the ability to improve productivity and change consumer/business spending habits across most sectors and industries. That’s why researchers at PwC expect the global addressable market for AI to reach $15.7 trillion by the start of the decade.

So far, the semiconductor giant Nvidia (NVDA -1.92%) was the undisputed beneficiary of the rise of AI. But according to select Wall Street experts, two other AI stocks offer a truly astounding upside — up to 1,050%!

Image source: Getty Images.

Sorry Nvidia, but you’re yesterday’s news

Between early 2023 and shortly after Nvidia completed its historic 10-for-1 stock split in June 2024, its valuation rose from $360 billion to a peak of $3.46 trillion. While it wasn’t the first $3 trillion company, we’ve never seen a market-leading business approach $3 trillion in less than 18 months.

Nvidia’s expansion was truly manual. The company’s graphics processing units (GPUs) have quickly become the preferred choice in enterprise data centers focused on running generative AI solutions and training large linguistic models (LLM). Based on TechInsights analyst estimates, Nvidia accounted for 98 percent of GPUs shipped to data centers in consecutive years. Furthermore, with its delayed H100 price, it is likely to maintain a near-monopoly market share in 2024.

The exceptional demand and otherworldly pricing power for Nvidia’s AI GPUs has been supported by the all-important CUDA software platform. CUDA is the toolset used by developers to build LLMs and get the most out of their Nvidia hardware. Think of CUDA as the hook that keeps customers loyal to Nvidia’s ecosystem of products and services.

But all periods of euphoria eventually end on Wall Street, and Nvidia may very well be yesterday’s news.

One of the biggest advantages Nvidia possesses is its pricing power. With demand for AI-GPUs overwhelming, Nvidia chips have often commanded a 100% to 300% price premium over rival hardware. But that could soon change.

A number of rival companies including Advanced microdevicesis ramping up production of considerably cheaper AI-GPUs that are currently available. Enterprises looking to gain first-mover advantage may have strong incentives to use these rival chips.

In addition, Nvidia’s four largest customers by net sales are internally developing AI-GPUs either as additions to or as potential replacements for the AI-GPU hardware they have ordered from Nvidia. The writing certainly seems to be on the wall that access to AI-accelerated data center “real estate” will be harder to come by in 2025 and beyond.

As new chips become available and Nvidia’s larger customers supplement their needs with in-house developed AI-GPUs, it is very likely that Nvidia will see its pricing power and gross margin fade. In short, Nvidia’s best days are probably in the rearview mirror.

But based on the forecast of select Wall Street experts, that’s not the case for two other AI stocks with potential growth.

The Model 3 is Tesla’s best-selling sedan. Image source: Tesla.

Tesla: 1,050% Implied Growth

The first AI stock that could blow investors away, in terms of upside, is the electric vehicle (EV) maker adze (TSLA -0.29%). Ark Invest CEO and Chief Investment Officer Cathie Wood has Tesla stock headed for $2,600 per share by 2029. Based on its share price at the time of writing, that would translate to a eventual increase of 1,050%!

The main thesis behind Ark’s Monte Carlo analysis is that autonomous transportation (ie, robotaxis) will drive much of Tesla’s growth. Ark’s expected case is for Tesla to generate $1.2 trillion in sales by 2029, of which 63 percent would come from its robotaxi operations. Additionally, 86% of the estimated $440 billion in earnings before interest, taxes, depreciation and amortization (EBITDA), would come from autonomous transportation services.

Although Tesla is North America’s leading electric vehicle maker, and the company has done something no other automaker has done in over half a century — build a new car company from the ground up to mass production — – there’s plenty of reason to think Wood’s price target for the company won’t come anywhere close to reality.

The glaring flaw in Wood’s Monte Carlo analysis is that it assumes rapid adoption of Tesla’s robotaxis. However, Tesla has exactly zero autonomous robotax on public roads today, and it hasn’t gone beyond full level 2 self-driving autonomy in years.

By comparison, Mercedes-Benz began selling vehicles with Level 3 self-driving technology in California and Nevada late last year and has developed hands-free Level 4 self-driving systems. Tesla has quickly lost its lead when it comes to self-driving capabilities, and it is very unlikely to achieve the sales and EBITDA targets set by Cathie Wood.

To make matters worse, Tesla is losing its grip on the electric vehicle space, with competition coming out of the woodwork. After sparking a price war last year in which Tesla slashed the price of its electric vehicle models on more than half a dozen occasions, its operating margin has been falling, predictably. The bottom line is that these price cuts haven’t stopped an increase in global electric vehicle stock for the company.

Last but not least, a growing percentage of the company’s pretax income can be traced to regulatory tax credits sold to other automakers and interest income on its cash position. These are unsustainable sources of income and not what you would expect from a market leader.

Suffice to say, I don’t think Tesla is the “next Nvidia.”

Mobileye Global: 216% Implied Growth

The other AI stock with a tantalizing edge that could make Nvidia news yesterday is the advanced driver assistance systems (ADAS) and self-driving technology company. Mobileye Global (MBLY -1.94%). Have you noticed the next generation vehicle/EV trend yet?

Evercore ISI global automotive and mobility analyst Chris McNally thinks Mobileye stock can rise to $35 a share. While that’s below the record closing high, it would represent a staggering 216% increase from where the stock is trading at the time of writing.

The optimism surrounding Mobileye has to do with the continued addition of technology and driver safety features with each new generation of vehicles — especially electric vehicles. The company’s EyeQ range of chips is based on SuperVision, an end-to-end ADAS system enabled by 11 cameras and autonomous vehicle maps that learn over time.

While there is a lot of excitement surrounding this technology, the EV industry faces challenges that typically plague early-stage innovations. The lack of available EV infrastructure, among other factors, has weakened global EV sales in recent quarters and led to reduced demand for Mobileye’s solutions.

Mobileye Global also pointed to a key customer outside China delaying the launch of its ADAS system, as well as new tariffs in Europe and the US, as additional reasons it had to temper its sales guidance of late. The company’s full-year sales guidance of $1.64 billion in the middle is well below the $1.96 billion peak that had been expected sometime in 2024.

If there’s an upside for Mobileye Global, it’s that the company ended the second quarter with $1.2 billion in cash and cash equivalents and no debt on its balance sheet. Even for busy short-term orders, Mobileye possesses exceptional financial flexibility.

While it may take some time for demand for ADAS technology to mature, Mobileye’s solutions appear well-positioned for eventual success.