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

Nvidia (NASDAQ: NVDA) has been one of the best success stories in the tech sector, climbing to become the largest company in the world. Its graphics processing units (GPUs) are the engine of artificial intelligence (AI) infrastructure. Its CUDA software platform and networking platform have helped create a wide moat for the company, especially around large language model (LLM) training.

The company's growth has been nothing short of spectacular. Its revenue has increased eightfold over the past three years, and it grew an impressive 73% last quarter. Meanwhile, with AI data center spending expected to exceed $700 billion this year, the company sees no signs of growth slowing down.

That said, Nvidia now has the law of large numbers working against it, and it is starting to see increased competition. More and more companies have been looking for cheaper alternatives, including designing their own custom chips. Total cost of ownership becomes an even bigger factor with inference, since it involves an ongoing cost every time someone makes a query or has AI perform a task. Even Nvidia seemingly admitted that its one-chip-to-rule-them-all strategy might have to go away when it licensed Groq's technology and hired its employees to design chips specifically for inference.

While Nvidia is still a great company and a solid stock to own, there could be two competitors whose stocks have better upside.

Broadcom: The custom chip leader

Broadcom (NASDAQ: AVGO) is benefiting from two of the biggest trends in AI infrastructure: networking and custom AI chips. The company is a data center networking leader, and as chip clusters become larger, the importance of networking only grows. The company's Tomahawk Ethernet switch is a cornerstone in AI data centers, while it also has a variety of other important networking components that help prevent bottlenecks and optimize the flow of data. Revenue for this business grew 60% in Q1 2026 and is expected to accelerate.

The company's biggest opportunity is with custom AI chips. Broadcom is a leader in application-specific integrated circuit (ASIC) technology, where it provides the blueprints and intellectual property to help turn its customers' designs into chips that can be produced at scale with high yields. Because ASICs are hardwired for specific tasks, they tend to perform them very well while being more energy-efficient. This is a big selling point, especially for inference.

Meanwhile, after it helped Alphabet develop its highly successful Tensor Processing Units (TPUs), other hyperscalers (owners of large data centers) have been flocking to Broadcom for its ASIC services.

Broadcom recently projected that its AI ASIC revenue would exceed $100 billion in fiscal 2027, which is more than 1.5 times the total revenue it generated in fiscal year 2025. That's explosive growth, and a huge reason to own the stock.

Image source: Getty Images.

AMD: The agentic AI infrastructure play

Advanced Micro Devices (NASDAQ: AMD) is also at the intersection of two strong trends. The company is the distant No. 2 player in the GPU market behind Nvidia, but it has carved out a niche in the inference market. It has also formed partnerships with and gotten large GPU commitments from both OpenAI and Meta Platforms. With both customers getting equity warrants tied to AMD's price and GPU deliveries, they both have an incentive to help AMD succeed. This alone should be a nice growth driver for the company. However, it is not the only one.

AMD is also the leader in data center central processing units (CPUs). While GPUs are the muscle, CPUs act more like the brains of the operation. Demand for CPUs has also been on the rise along with the data center buildout, but there is an additional catalyst on the horizon: agentic AI. AI agents need more workflow coordination and data management, which is where CPUs come in. This is a huge opportunity that is emerging, which, along with its GPU deals, should help AMD deliver robust growth moving forward, making it a top AI stock to own.

Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, Broadcom, and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.