Over the past decade, Nvidia's (NVDA 0.28%) rally of approximately 29,530% would have turned a $20,000 investment into $5.9 million. That millionaire-making rally was initially driven by the market's robust demand for its gaming GPUs, but its recent growth spurt was sparked by the explosive AI market -- which drove more companies to buy its newest data center GPUs to process complex machine learning and artificial intelligence (AI) tasks.
The market's demand for Nvidia's data center GPUs is still outstripping its available supply. Analysts expect the chipmaker's revenue and earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 50% and 56%, respectively, from fiscal 2024 to fiscal 2027 (which ends in January 2027). Its stock still looks reasonably valued at 36 times next year's earnings -- but it could still face more unpredictable regulatory, macro, and competitive headwinds.
Image source: Getty Images.
So while Nvidia is a great long-term investment in the long-term expansion of the AI market, it might be smart for investors to look beyond the sector's bellwether and check out a few other underappreciated AI stocks. I believe these three other millionaire-making AI stocks are compelling alternatives to Nvidia right now: AMD (AMD 1.91%), Super Micro Computer (SMCI 5.00%), and Microsoft (MSFT 0.17%).
1. AMD
In 2014, AMD's stock dropped to $3 as it failed to keep up with Intel in the CPU market and Nvidia in the GPU market. But if you had invested $20,000 in AMD back then, your investment would be worth $1.1 million today.
AMD bounced back under CEO Lisa Su, who drove the chipmaker to sell more custom APUs (which merge CPUs and GPUs) for gaming consoles, design more powerful and more power-efficient chips, and shift its production to Taiwan Semiconductor Manufacturing. It also acquired the programmable chipmaker Xilinx, rolled out more server chips, and expanded its lineup of data center GPUs for accelerating AI tasks. As AMD turned itself around, Intel struggled with persistent delays, production issues, and chip shortages.
From 2023 to 2026, analysts expect AMD's revenue to grow at a CAGR of 20% as its EPS increases at a CAGR of 102%. That growth should be fueled by its market share gains against Intel in the CPU market, the stable growth of its gaming GPU business, and AI tailwinds for its cheaper data center GPUs. AMD's stock might seem a bit pricey at 50 times next year's earnings -- but its strengths could justify its premium valuation and drive its stock even higher over the next decade.
2. Super Micro Computer
Super Micro Computer, more commonly known as Supermicro, was once considered a slow-growth supplier of traditional servers. But if you had invested $20,000 in Supermicro 10 years ago, your investment would have grown to over $2.7 million this March...before shrinking back to about $400,000 today.
Supermicro is an underdog in the server market, but it carved out a niche by producing high-end liquid-cooled servers. That focus made it an ideal partner for Nvidia, which granted it early access to its high-end data center GPUs to produce dedicated AI servers. It now generates over half of its revenue from its AI servers.
From fiscal 2024 to fiscal 2026 (which ends in June 2026), analysts expect Supermicro's revenue and EPS to grow at a CAGR of 46% and 39%, respectively. Those are stunning growth rates for a stock that trades at just 12 times next year's earnings, however, its valuations are being compressed by a short-seller's allegations of accounting issues, a delayed 10-K filing, and rumors of a regulatory probe. Supermicro's stock could bounce back quickly if it resolves those pressing issues.
3. Microsoft
If you'd invested $20,000 in Microsoft 30 years ago, your investment would be worth nearly $2.5 million today. Much of that growth occurred after Satya Nadella took the helm as the tech giant's third CEO in 2014.
Under Nadella, Microsoft transformed its desktop-based applications into cloud-based services, expanded Azure's cloud infrastructure platform, and rolled out more mobile versions of its apps for Android and iOS devices. It also expanded its Xbox business, rolled out more hardware devices, and tightly integrated OpenAI's generative AI tools into its ecosystem.
That forward-thinking transformation turned Microsoft into a growth stock again. From fiscal 2024 to fiscal 2027 (which ends in June 2027), analysts expect its revenue and EPS to grow at CAGRs of 14% and 15%, respectively, as its cloud, mobile, AI, and gaming businesses continue to flourish. Its stock still looks reasonably valued at 27 times next year's earnings, and it could be a much more balanced play on the AI market than Nvidia.
