In a world of GPUs, PCs, and semiconductors, Nvidia seems to be a top stock, but which of these alternatives should you add to your portfolio?
Nvidia (NASDAQ: NVDA) is a popular company and a hot name for gamers, A.I., and mobile computing alike. In fact, Nvidia is fast becoming a favorite stock of mine as it goes from strength to strength, reeling in clients such as Sony (NYSE: SNE), Toyota (NYSE: TM), and Tesla (NASDAQ: TSLA).
However, if you want to hedge your bets or don’t feel like Nvidia quite fits your portfolio, here are my top 3 competitors to Nvidia which might prove to be exactly what you are looking for.
1. Advanced Micro Devices
Any esports investor or gaming enthusiast worth their salt knows of the longstanding competition between Advanced Micro Devices (NASDAQ: AMD) and Nvidia. Whilst Nvidia may be the one to beat in the best graphics processing units (GPUs), it shares the market with AMD and Intel (NASDAQ: INTC).
AMD has managed to outpace Nvidia in the past 3 years as it tends to focus on lower and mid-range priced GPUs. In addition, it was announced in March that Advanced Micro Devices will work with Hewlett Packard Enterprises (NYSE: HPQ) on the El Capitan Project, powering the world’s fastest supercomputer.
Advanced Micro Devices has had a good 2020 so far. Its last quarter figures showed a 41% increase in its gross margin from the year before — the highest it has had in 8 years — which could be due to coronavirus-induced entertainment sales, such as new gaming hardware. However, with its stock up nearly 3,000% in the last 5 years, AMD has shown serious growth. Going into the second half of 2020 could see AMD go from strength to strength with the releases of the newest Playstation and Xbox consoles, for which it produces CPU software.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!
By the end of 2019, Intel had a 63% market share of PC GPUs whilst AMD held 19% and Nvidia held 18%. For this last quarter, Intel is expected to have a 12% increase in revenue in comparison to the same quarter last year, as well as an almost 5% increase for its quarterly earnings per share year-on-year. Despite a rocky Q1, Intel is currently outperforming the market as a relatively stable demand for PCs grew into Q2.
Since 2017, Intel has been slowly losing ground to AMD in the CPU market, but investors shouldn’t dismiss this enterprising giant so quickly — in laptops alone, Intel accounts for 86% of CPUs this year. This will change in the near future however as Apple (NASDAQ: AAPL) recently announced that they will begin to produce their own chips, breaking up a 14-year partnership between the two companies.
In other markets, Intel could be well-placed to rival Nvidia in the future of autonomous vehicles as it recently spent $900 million on ‘Moovit’, an Israeli mobility as a service (MaaS), AI solutions company. Intel already owned ‘Mobileye’ as well as several computer vision companies. These assets including a driverless platform — co-developed with the likes of BMW, Fiat Chrysler (NYSE: FCAU), and Delphi (NYSE: DLPH) — sets Intel up as a potential powerhouse in the driverless car markets going forward.
Broadcom (NASDAQ: AVGO), another semiconductor and infrastructure software company, has made waves in the last couple of years and has a 10-year streak of increased dividend payouts to its investors. Broadcom would not be considered a major competitor to Nvidia in comparison to AMD, Intel, or Qualcomm (NASDAQ: QCOM). Yet, in 2019 its net income was $2.7 billion — higher than AMDs $341 million, which operates in 3 of the same markets.
Nvidia has already surpassed that amount in 2020 alone, but Nvidia is much more diversified than Broadcom and thus can bring in more revenue overall. However, Broadcom does diversify within the data sector providing services in the mainframe, industrial, and enterprise markets as well as solutions for wireless, broadband, and networking. It does these things so effectively that last year it attempted to buy Qualcomm, a move which was prevented by the Trump Administration over national security concerns.
In a market of big players such as Samsung and Intel, Broadcom has managed to carve a 3.7% share in the semiconductor market — for comparison, Intel occupies 16.2%. With Broadcom projecting a 9% adjusted EBITDA growth and signing a contract with Apple for the next 3 years, this stock is one to watch going forward.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.