Nvidia Reports Earnings This Month, and I'm Not Buying Shares. 1 AI Stock to Buy Now Instead.

Nvidia (NASDAQ: NVDA) is set to report its fiscal first-quarter 2027 results after the market closes on May 20. Heading into the report, shares sit near record highs, up about 21% year to date as of this writing. The AI chipmaker has also guided for fiscal first-quarter revenue of about $78 billion -- a forecast that implies approximately 75% year-over-year growth.

So why am I not buying ahead of what will almost certainly be another amazing quarter?

The issue is that the very customers funding this surge are increasingly building or commissioning their own artificial intelligence (AI) chip alternatives, while the stock's valuation already prices in years of uninterrupted dominance. And with a price-to-earnings ratio of about 46 as of this writing, even small shifts in the demand picture could weigh on shares.

Meanwhile, there is one AI chip story I think looks far more attractive at today's prices.

Image source: Nvidia.

Nvidia's momentum looks real -- but only goes so far

There is no question Nvidia is still firing on all cylinders. The company's fiscal fourth-quarter revenue (reported in late February) hit a record $68.1 billion, up 73% year over year and 20% sequentially. The pace of growth even accelerated -- up from 62% year-over-year growth in fiscal Q3. And data center revenue alone came in at $62.3 billion -- up 75% from a year earlier, with networking revenue of $11 billion soaring more than 3.5 times.

But the story has another side.

The biggest cloud and AI buyers are quietly working to reduce their dependence on the AI chipmaker. Broadcom (NASDAQ: AVGO) sits at the center of much of this. In early April, Broadcom disclosed a long-term agreement to design and supply custom tensor processing units for Alphabet's Google through 2031, along with an expanded arrangement giving Anthropic access to roughly 3.5 gigawatts of TPU-based compute starting in 2027. Broadcom is also co-developing custom accelerators for OpenAI under a 10-gigawatt partnership announced last fall and has been Meta's silicon partner for years.

That is a meaningful list of Nvidia's most important customers all working on credible non-Nvidia options.

Sure, demand for Blackwell looks insatiable for now, and Nvidia's hardware remains the default for cutting-edge AI training. But pricing power could soften as alternatives become more credible -- and at Nvidia's current valuation, the stock doesn't seem to have much room for margin compression.

A better way to play the AI chip boom

This is where Amazon (NASDAQ: AMZN) comes in.

The e-commerce and cloud-computing giant's chip story may be one of the most underappreciated growth narratives in tech today.

In its first-quarter 2026 earnings release in late April, Amazon said its chips business -- which includes Trainium, Graviton, and Nitro -- has crossed a $20 billion annual revenue run rate and is growing at a triple-digit pace year over year.

CEO Andy Jassy went further on the company's first-quarter earnings call: "If our chips business was a stand-alone business and sold chips produced this year to AWS and other third parties as other leading chip companies do, our annual revenue run rate would be $50 billion" -- an achievement that would likely put Amazon's custom silicon operation among the top three data center chip businesses.

Amazon has more than $225 billion in revenue commitments tied to Trainium alone, and major model developers, including OpenAI and Anthropic, are now committing gigawatts of capacity to Amazon's chips. Further, Trainium2 is largely sold out, Trainium3 began shipping early this year, and much of Trainium4 has already been reserved.

And this chip business, of course, helps fuel Amazon's own cloud operation, Amazon Web Services (AWS). AWS revenue in the first quarter grew 28% year over year to $37.6 billion, with operating margin coming in at a hefty 37.7%.

Of course, there are some meaningful risks. Capital expenditures hit $43.2 billion in the first quarter alone, with a full-year 2026 target of about $200 billion. Spending like this would put Amazon in a tough spot if demand for AI compute suddenly slowed.

Still, Amazon offers something Nvidia doesn't: a far more diversified business that pairs cloud computing dominance with a fast-growing custom chip portfolio -- all at a more reasonable valuation. As of this writing, Amazon trades at about 32 times earnings -- a meaningful discount to Nvidia, and arguably a fairer price for a company whose chip business may be growing even faster than the AI chip leader's.

For investors weighing where to put new money in AI chips today, Amazon arguably looks like the better long-term bet.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.