Should You Forget Nvidia and Buy 2 Artificial Intelligence (AI) Stocks Instead?

Nvidia (NASDAQ: NVDA) has been a pioneer in the field of artificial intelligence (AI) hardware, and it continues to be one of the most important companies powering the proliferation of this disruptive technology.

That explains why Nvidia's growth isn't showing any signs of slowing down, even though the company has achieved massive scale driven by booming demand for its AI chip systems. Analysts are forecasting a 73% increase in Nvidia's earnings this year, on a 70% jump in revenue to $367 billion. Even better, Nvidia is trading at an attractive 22 times forward earnings, suggesting that it has more upside potential.

However, Nvidia stock has been underperforming the market recently, gaining just 2% in six months, compared to the 27% appreciation in the PHLX Semiconductor Sector index over the same period. The underperformance is primarily due to factors outside its control, which is why investors may be tempted to look at other AI stocks to capitalize on the fast-growing adoption of this technology.

That's why we are going to take a closer look at two names -- Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Snowflake (NYSE: SNOW) -- which have the potential to deliver bigger gains than Nvidia in the long run.

Image source: Alphabet.

1. Alphabet

Alphabet is probably one of the most complete AI stocks to buy right now. The Magnificent Seven company offers various consumer-facing services, including the Google search engine, the Gemini chatbot, the Google Cloud Platform, and YouTube. It has been integrating AI into all these areas, and more importantly, it is reaping the benefits of this strategy.

The company's Gemini app now has more than 750 million monthly users, while the integration of generative AI tools into Google Search is driving greater user engagement. For example, queries in Google Search's AI Mode are three times longer than traditional searches.

Meanwhile, Alphabet is also using AI to drive better returns on ad spending for advertisers. It uses its Gemini foundational model to deliver ads that are more relevant and meaningful, thereby improving the target audience for advertisers. Additionally, Alphabet is offering agentic AI tools to help advertisers easily create and optimize ad campaigns.

On the other hand, the Google Cloud business is also experiencing tremendous growth driven by the adoption of AI products. Alphabet reported a 55% sequential increase in its Google Cloud backlog to $240 billion last quarter. This terrific backlog should ideally ensure the segment's robust growth continues following the 48% year-over-year revenue jump in the fourth quarter.

And finally, Alphabet may be sitting on a massive revenue opportunity in custom AI chips, which are preferred by hyperscalers and pure-play AI companies. Last October, Alphabet announced that it would sell its custom AI chips, known as tensor processing units (TPUs), to Anthropic to train its Claude model. This partnership is anticipated to be worth tens of billions of dollars.

Not surprisingly, Gil Luria of investment service firm D. A. Davidson estimates that a $900 billion revenue opportunity could open up for Alphabet if it decides to sell its TPUs to third parties. As such, it is easy to see why analysts have increased their revenue growth expectations from Alphabet.

GOOG Revenue Estimates for Current Fiscal Year data by YCharts

With Alphabet stock trading at just 9 times sales compared to Nvidia's sales multiple of 20, the former is likely to be rewarded with more upside, especially given its position to capitalize on AI adoption across multiple verticals.

2. Snowflake

Snowflake is known for operating a cloud-based data platform that allows customers to store, analyze, and share their data, among other tasks. The company has been offering AI tools to help customers get more out of their proprietary data.

Snowflake's platform enables enterprises to build AI workflows, agents, and applications capable of analyzing documents and retrieving data. It also operates a serverless graphics processing unit (GPU) platform, which allows customers to rent compute infrastructure from Snowflake to run AI models as needed.

The good news is that Snowflake's AI services are in hot demand. The company recently pointed out that more than 9,100 customers are using its AI solutions, more than double the 4,000 accounts using AI in the year-ago period. What's more, Snowflake's AI offerings are not just helping it attract more customers, but also driving more business from existing customers.

Snowflake's customer base grew by 21% year over year in the fourth quarter of fiscal 2026 (which ended on Jan. 31, 2026) to 13,328. That's an improvement over the 19% growth it witnessed in the same quarter last year. This combination of strong customer growth and the increasing adoption of its AI solutions explains why Snowflake's remaining performance obligations (RPO), which is the total value of contracts yet to be fulfilled at the end of a period, jumped by 42% year over year in fiscal Q4 to $9.77 billion.

That was well above the 30% growth in the company's product revenue last quarter to $1.23 billion. Moreover, Snowflake's impressive RPO means that it is in a position to exceed the 27% growth in product revenue it is anticipating in fiscal 2027. What's more, Snowflake has guided for an improvement of 2.5 percentage points in the operating margin this year to 12.5%, which isn't surprising as it is getting more business from existing customers.

So, it is easy to see why analysts have become bullish about its growth prospects and expect the company to exceed its guidance this year. The company is expected to see healthy earnings growth over the next two years as well.

SNOW EPS Estimates for Current Fiscal Year data by YCharts

Given that Snowflake's sales multiple of 13 is significantly lower than Nvidia's, this AI stock may have room for more upside than the AI pioneer, as the market could reward Snowflake with a premium due to its accelerating growth.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Nvidia, and Snowflake. The Motley Fool has a disclosure policy.