3 Stocks to Cash In on AI Without Investing in Nvidia

Stocks to buy

Artificial intelligence (AI) has captured investors’ attention for over one year now. Today, everyone understands its disruptive force and potential to contribute trillions of dollars to the world economy. Although Nvidia (NASDAQ:NVDA) has been an unequalled AI investment, many AI stocks to cash in on exist.

Besides Nvidia, other chip companies are developing AI chips to power the building and training of large language models (LLMs). Furthermore, due to the demand surge for AI chips, expect growth across the entire semiconductor value chain. Electronic design automation providers, semiconductor equipment suppliers, foundries and testing and packaging providers will all profit.

Then, there are the companies leveraging AI to build tools for customers. They are integrating LLMs to enable faster data processing, personalized customer service and improved productivity.

These three companies have begun monetizing their AI products and are well-positioned to capitalize. They are top stocks to cash in on AI over the next year.

Advanced Micro Devices (AMD)

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Although Nvidia has grabbed most of the AI headlines, Advanced Micro Devices (NASDAQ:AMD) is a close second. Indeed, the semiconductor company has proved it can match Nvidia’s innovation and expects $3.5 billion in AI chip sales this year.

In December 2023, the company announced its MI300 chips, which have more memory capacity and energy efficiency than prior chips. These chips can power high-performance compute workloads and train the most demanding LLMs. Already, they are seeing robust demand as companies seek to reduce their reliance on Nvidia.

Notably, AMD’s AI chips are emerging as a capable alternative. During the announcement, the company disclosed that it had partnered with Microsoft (NASDAQ:MSFT). The software company will use the MI300X on its Azure virtual machines. Another AI leader, Meta Platforms (NASDAQ:META), also confirmed that it will deploy its MI300 AI chips in its data centers.

Lastly, on April 16, the company launched AI chips to power personal computers. Its Ryzen PRO 8000 series processors for desktops and Ryzen PRO 8040 for laptops are some of the most advanced chips for AI PCs. Indeed, according to Canalys, this could be a huge growth driver. They project that 48 million AI PCs will be sold this year and will grow to 100 million in 2025.

Microsoft (MSFT)

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This technology giant recognized the opportunity in AI early. In January 2023, it announced its partnership with OpenAI and hasn’t looked back since.

First, Azure AI, its cloud infrastructure service, is providing the tools to build, train and deploy LLMs. Most companies don’t want to invest in data centers that provide the compute and storage for AI workloads. That’s where Azure comes in, providing the compute and resources to build and train models, industry-leading LLMs, APIs, storage and tools to build AI solutions.

Secondly, Microsoft continues to heavily invest in integrating AI into its products and services. After all, Microsoft is a productivity company, so it is using AI to simplify tasks and improve decision-making. A good example is GitHub, its developer platform. Over 1.3 million developers now subscribe to GitHub Copilot, which uses AI to complete code and turn natural language prompts into code.

Further, the biggest opportunity is with Microsoft Copilots. In September 2023, the company launched Copilots for Windows and Microsoft 365 applications such as Paint, Notepad, Word, PowerPoint and Excel. Already, Microsoft is charging $30 per user monthly for Copilot. As the service improves with additional capabilities, MSFT will capture more value through price hikes.

Meta Platforms (META)

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Although Meta Platforms might be primarily used for social media, it’s also one of the best stocks to cash in on AI. Chief Executive Officer (CEO) Mark Zuckerberg is pressing on with AI investments and plans to make the social media giant a key AI player.

The company’s journey into the AI arena was out of necessity. Apple’s (NASDAQ:AAPL) IDFA forced Meta Platforms, which owns Facebook, Instagram and WhatsApp, to adopt AI to improve its advertising performance.

Now, these heavy investments in 2021 and 2022 are bearing fruit. The platform has leveraged AI to improve recommendations on its social media platforms and, hence, user engagement. On the customer side, it has improved its platform for advertisers, enabling them to get better performance on their ads.

Also, the company competes in the LLM arena through Llama, its open-source LLM. The plan to keep Llama open source is strategic. Zuckerberg hopes to attract more developers who will improve the platform and make it their default.

So far, the social media giant is keeping pace with competition and recently released Llama 3. META claims it’s one of the most powerful models available. Considering its continued innovation, Meta Platforms is among the top stocks to cash in on AI.

On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.

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