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Globe and Mail
36 minutes ago
- Globe and Mail
Prediction: These 2 AI Chip Stocks Will Outperform Nvidia Over the Next 5 Years
Key Points Nvidia is the dominant player in AI infrastructure, but its size could limit some of its upside. AMD and Broadcom, meanwhile, have huge opportunities. Given their smaller sizes, the stocks have the potential to outperform Nvidia in the coming years. 10 stocks we like better than Advanced Micro Devices › Nvidia is the undisputed king of artificial intelligence (AI) infrastructure. The company has a dominant share in the graphics processing unit (GPU) market, where its chips provide the processing power necessary to run AI workloads. Its CUDA software platform has helped create a wide moat, giving the company over 90% market share in the GPU space. That said, Nvidia has become a mammoth company, recently hitting a $4 trillion market cap. As such, it now faces the law of large numbers. It can keep growing, but it will get more difficult to keep up the same pace. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » That's why the stocks of Advanced Micro Devices (NASDAQ: AMD) and Broadcom (NASDAQ: AVGO) could outperform the GPU leader over the next five years. Both have smaller revenue bases to work from and big potential tailwinds. Advanced Micro Devices AMD, as the company is also known, has been seeing strong revenue growth, but its AI opportunity could just be getting started. While it's still a distant second to Nvidia in GPUs, it has been able to carve out a niche in AI inference. On its last earnings call, AMD said that one of the largest AI model companies in the world is using its GPUs to run a significant chunk of its daily inference workloads. Major cloud providers have been using its chips to run search, recommendation engines, and generative AI tasks. The company's ROCm software platform still trails CUDA, but it's generally considered good enough when it comes to inference. The reason the stock can outperform, though, largely comes down to size. Nvidia's data center revenue hit $39.1 billion last quarter, while AMD's was just $3.7 billion. It doesn't have to take massive share from the leader to see explosive growth, as even modest wins can make a big impact. AMD is also a leader in data center central processing units (CPUs), where it has gained meaningful share against Intel. CPUs act as the brains of the operation, so as AI workloads expand, demand for high-performance CPUs will also grow. Meanwhile, the UALink Consortium which was formed by AMD, Intel, Broadcom, and others, is looking to challenge Nvidia's NVLink and its proprietary interconnects. It wants to develop an open standard for high-speed, low-latency interconnects for AI accelerators in data centers. If successful, it could erode one of Nvidia's biggest advantages and open the door for companies to use clusters of multiple vendors. That would be huge for AMD. With AI inference expected to eventually eclipse training in size, AMD has a big opportunity. Broadcom Broadcom isn't directly chasing Nvidia in the GPU market. Instead, it's competing against the company in AI networking and by helping customers design custom AI chips. Broadcom makes networking components -- like Ethernet switches and optical interconnects -- that are essential in transferring huge data volumes across large AI clusters. As these clusters get bigger, so do networking demands. This is helping drive the company's revenue growth, and last quarter its AI networking revenue surged 70%. However, the company's biggest opportunity is in application-specific integrated circuits (ASICs). It helped Alphabet develop its highly successful Tensor Processing Units (TPUs) and is now designing custom AI chips for several other hyperscalers (companies that operate huge data centers). These custom chips can deliver better performance and power efficiency than off-the-shelf GPUs, and demand is growing fast. Management has said that its three custom AI chip customers that are the furthest along in their development are planning to deploy up to 1 million chip clusters each by its fiscal 2027, representing a $60 billion to $90 billion opportunity. That doesn't even include newer wins like Apple. And given the up-front costs of designing custom chips, they are typically used in large deployments. Broadcom also owns VMware, which is becoming increasingly important in AI cloud environments. Its Cloud Foundation platform helps enterprises manage AI workloads across hybrid and multi-cloud environments, and it is seeing strong upselling to this platform. With its networking portfolio, custom chips, and virtualization software, the company has a lot of growth in front of it. The bottom line Nvidia is still a great company, and its stock has room to move higher. However, it just saw its data center revenue increase more than ninefold in two years. At some point, it gets harder to keep posting that type of breakneck growth. Meanwhile, AMD and Broadcom both have much smaller AI-related revenue streams today. If AMD can take some GPU market share in inference, that would be a huge growth driver. And if Broadcom's customers start producing a huge amount of custom chips based on its intellectual property, it could unlock tens of billions in high-margin revenue. As such, I think both AMD and Broadcom stocks are well-positioned to outperform Nvidia over the next five years. Should you invest $1,000 in Advanced Micro Devices right now? Before you buy stock in Advanced Micro Devices, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Advanced Micro Devices wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $671,477!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,010,880!* Now, it's worth noting Stock Advisor 's total average return is1,047% — a market-crushing outperformance compared to180%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
CTV News
41 minutes ago
- CTV News
Trade, tariffs top Chatham-Kent councillors talk with U.S. counterparts
Alysson Stoney, a councillor for the Municipality of Chatham-Kent speaks at a Great Lakes Regional Forum Meeting at the National Association of Counties annual conference in Philadelphia, Pa., on July 12, 2025. (Source: Federation of Canadian Municipalities) A representative from the Municipality of Chatham-Kent was part of a Canadian delegation in Philadelphia talking trade, tariffs, and other matters with U.S. counterparts. Alysson Storey, a councillor for Chatham-Kent, is the vice-chair of the Ontario Caucus for the Federation of Canadian Municipalities (FCM). Storey was part of the FCM team attending the annual conference for the National Association of Counties over the weekend, which consists of more than 2,000 officials from counties across the U.S. 'If we can learn from the solutions and the challenges they're working on here in the U.S. or vice versa, that benefits all of us,' Stoney said on Saturday. Speaking to CTV News from the conference, Storey said the meetings and presentations are an opportunity to speak about challenges facing municipalities in both countries. 'What is clear, especially with states that are close to the Canadian border, they're very aware of the tariff impacts,' Storey explained. 'They're already seeing it in manufacturing and agriculture, in border crossings and tourism.' Ties between Canada and the U.S. have been precarious due to a changing trade landscape, largely fuelled by tariffs levied by U.S. President Donald Trump. On Thursday, Trump announced a 35 per cent tariff on Canadian imports starting Aug. 1. Similar to upper levels of Canadian Governments, Storey said their messaging remains tariffs will hurt economies on both sides of the border. 'As the government of proximity, local governments, both here in the states and in Canada, we're the first ones to see impacts on jobs, we're the first ones to see impacts of factory closures, the first ones to see impacts on tourism,' Storey explained. FCM representatives began a larger dialogue with their U.S. counterparts earlier this year to discuss ongoing challenges. Storey planned to speak as part of a forum for states around the Great Lakes, as well as talks on rural affairs and agriculture. 'The agriculture piece is huge,' she said. 'That is our primary economic driver in our community as it is in a lot of southwestern Ontario, so farmers have issues with the trade concerns.' The FCM delegation planned to return home on Sunday.
Toronto Star
an hour ago
- Toronto Star
At least 30 are killed in Israeli strikes in Gaza as war deaths top 58,000, officials say
DEIR AL-BALAH, Gaza Strip (AP) — Israeli strikes in the Gaza Strip killed at least 30 people on Sunday, including six children at a water collection point, local health officials said, despite attempts by mediators to bring about a ceasefire. Israel and Hamas appeared no closer to a breakthrough in talks meant to pause the 21-month war and free some Israeli hostages. Israeli Prime Minister Benjamin Netanyahu was in Washington last week to discuss the deal with the Trump administration, but a new sticking point has emerged over the deployment of Israeli troops during the truce, raising questions over the feasibility of a new deal.
