Prediction: 2 artificial intelligence (AI) stocks that will be worth more than Nvidia by 2030

Nvidia has undeniably dominated the AI investment landscape, with its market value soaring by over $4 trillion since late 2022, fueled by massive hyperscale cloud spending on its GPUs. However, the market’s lofty expectations for Nvidia may overshadow more compelling, undervalued AI opportunities. We explore why Amazon and Meta Platforms are poised to potentially surpass Nvidia’s market capitalization by 2030, offering significant long-term upside.

Nvidia's Trajectory: High Expectations, Emerging Headwinds

Nvidia’s rapid growth, seen in its 69% revenue increase last quarter, reflects strong demand. Yet, this aggressive pace faces challenges. Major hyperscalers like Microsoft (Maia300) and Meta (MTIA chips) are heavily investing in custom silicon for AI workloads, which will reduce Nvidia reliance. Competition from AMD is also intensifying, offering strong price-performance alternatives. As supply-demand balances and competition rises, Nvidia's exceptional gross margins may compress. Trading at over 42 times forward earnings, Nvidia’s current valuation reflects incredibly high expectations. For investors seeking value and sustainable long-term AI growth, Amazon and Meta offer a more balanced risk-reward profile.

Amazon: AI Powerhouse Beyond Chips

Amazon Web Services (AWS) is the world's largest public cloud provider and a major Nvidia customer. After a brief lag in generative AI in 2022, Amazon quickly caught up through strategic investments. Demand for AWS AI services is doubling year over year, despite its massive scale. AWS boasts a robust and improving operating margin, hitting 36.8% over the past year.

Beyond cloud, Amazon's retail segment is increasingly profitable, with North American operating margins reaching 7% last quarter, supported by 11% top-line growth. High-margin advertising revenue, up 22%, further boosts profitability. These trends—steady revenue growth and strong performance in high-margin operations—point to substantial future earnings. As AWS infrastructure spending matures, free cash flow is set to hit new records, enabling further strategic investments. Amazon's recent stock pullback presents an attractive entry point for AI-focused investors.

Meta Platforms: AI-Driven Engagement and Monetization

Meta is another significant Nvidia customer, primarily for its internal AI needs, representing one of the largest global AI infrastructure investments. This investment yields clear returns. Last quarter, Meta reported 22% sales growth and a 5-percentage-point operating margin expansion, outperforming peers. This is directly attributable to AI improving ad and organic content recommendations, driving higher ad impressions and pricing. Generative AI tools also simplify ad creation for marketers, boosting spend.

AI is unlocking new monetization avenues for Meta. AI chatbots in WhatsApp and Messenger could increase click-to-message ads. The Meta AI chatbot, with over 1 billion monthly active users, offers a vast new ad surface. Recent ad introductions in WhatsApp and Threads are strategic steps to expand ad supply. Furthermore, Meta leads in augmented and virtual reality (AR/VR), where AI will unlock significant value, as seen with Meta Glasses with integrated AI. With an attractive enterprise value around 16 times forward EBITDA, Meta’s substantial AI investments promise robust long-term profit potential.

Beyond Nvidia: Diversifying Your AI Future

While Nvidia has been a stellar performer, smart investors look ahead. Amazon and Meta Platforms leverage AI not just as a product but as a core enhancer of their vast ecosystems and diversified revenue streams. Their strong financial positions, coupled with deep AI integration, offer a compelling long-term investment narrative. With more balanced valuations compared to Nvidia, these tech titans are well-positioned to capitalize on the continued AI revolution, potentially delivering superior returns and reaching higher market valuations by 2030.