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

Core Viewpoint - Nvidia has seen a significant stock increase of 1,480% over the past five years but has faced a 17% decline since the start of the year, highlighting volatility in its business amid the AI boom [1] Group 1: Nvidia's Position - Nvidia is recognized as a leader in the AI sector, providing powerful GPUs essential for training and inference models, resulting in soaring revenue and earnings [1] - However, Nvidia faces potential risks including a slowdown in business during economic downturns, competition from customers developing their own chips, and supply chain challenges [2] Group 2: Alternative AI Investment Opportunities - Investors are considering alternatives to Nvidia, particularly established internet companies like Alphabet and Meta Platforms, which have reported better-than-expected Q1 financial results [2] - Alphabet's platforms, including YouTube, boast an estimated 2.5 billion monthly active users, while Meta's family of apps has 3.43 billion daily active users, an increase of 80 million in just three months [3] Group 3: AI Integration and User Base - Both Alphabet and Meta leverage their massive user bases to introduce AI products and services, with Alphabet's CEO noting that 15 products with half a billion users now utilize Gemini models [4] - Meta's CEO highlighted progress in AI initiatives, including AI glasses and Meta AI, which has nearly 1 billion monthly active users [5] Group 4: Financial Strength and Investment Plans - Alphabet and Meta reported net incomes of $16.6 billion and $34.5 billion, respectively, in Q1, showcasing strong profit margins [6] - The companies have a combined net cash of $125.8 billion, providing them with substantial financial resources for AI investments [7] - Alphabet plans to spend $75 billion on capital expenditures in 2025, while Meta has increased its target to between $64 billion and $72 billion [8] Group 5: Market Valuation and Investment Timing - The current economic environment has led to decreased investor confidence, but this presents an opportunity to purchase shares of these companies at attractive valuations, with Alphabet trading at a forward P/E ratio of 17 and Meta at 22 [10] - The stock prices of these companies are down more than 20% from their peaks, making it a potential time to invest [10]