Nvidia (NASDAQ: NVDA) recently announced exceptional growth in its latest quarter, with revenue and net income soaring into the billions at triple-digit rates. As the leading artificial intelligence (AI) chip provider, Nvidia experienced significant success with increased demand for its high-performance chips and related products and services. The company achieved a record-high revenue exceeding $22 billion.
Despite a remarkable 285% surge in its stock over the past year, Nvidia remains a strong investment option due to its promising future outlook. Another way to capitalize on Nvidia’s growth potential is by investing in companies that collaborate closely with this chip giant. Two primary examples are the prominent cloud service provider Amazon (NASDAQ: AMZN) through Amazon Web Services (AWS) and server powerhouse Super Micro Computer (NASDAQ: SMCI).
Why consider this approach? It provides the dual advantage of Nvidia’s growth momentum coupled with exposure to another top-performing business operating in diverse areas. Let’s delve into each in detail.
Amazon
Amazon’s AWS stands out as the industry leader in cloud services, contributing significantly to the company’s overall profitability. AWS offers a wide range of cloud solutions, with a recent focus on AI, investing in technology infrastructure and supporting client AI projects.
By investing in Amazon, you can leverage Nvidia’s growth as AWS incorporates Nvidia’s GPUs, the key AI chips, in its offerings. AWS also offers various Nvidia products like the Nvidia AI Enterprise platform to expedite AI development. The collaboration between AWS and Nvidia extends to new projects, such as developing the fastest AI supercomputer, powered by Nvidia GPUs.
Given AWS’s extensive client base, companies are likely to continue using AWS for Nvidia products and services, reflecting a substantial revenue growth opportunity for Amazon in the future.
Additionally, investing in Amazon provides exposure to its thriving e-commerce business, with significant growth potential and solid earnings history. At a forward earnings estimate of 41x, Amazon represents a compelling investment choice.
Super Micro Computer
Supermicro specializes in servers, storage systems, and related products, employing a modular approach to assemble customized solutions for clients.
The company closely monitors Nvidia’s product development to ensure compatibility and readiness to integrate Nvidia innovations swiftly. Supermicro also maintains collaborative partnerships with chip companies like Advanced Micro Devices and Intel, benefiting from the growth of all key players in the industry.
Supermicro’s strategy ensures the timely delivery of customized products powered by cutting-edge chips, leading to record demand for systems incorporating Nvidia and other top chip manufacturers’ products in the latest quarter.
Supermicro’s earnings have surged due to its close collaboration with AI chip leaders, with revenue projected to increase by at least 101% to $14.3 billion for the current fiscal year. The company’s valuation of 40x forward earnings estimates makes it an attractive AI growth stock investment.
Should you invest $1,000 in Amazon right now?
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John Mackey, former CEO of Whole Foods Market and Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino holds positions in Amazon. The Motley Fool holds positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool recommends Intel and Super Micro Computer and suggests options for long-term investments in Intel. The Motley Fool has a disclosure policy.
You Don’t Have to Buy Nvidia to Benefit From Its Explosive Artificial Intelligence (AI) Growth. You Can Buy These 2 Stocks Instead. was originally published by The Motley Fool
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