Key Takeaways
- Nvidia’s massive size may lead investors to seek gains in smaller stocks, such as Micron and AMD, that can more easily achieve higher-percentage growth.
- Micron develops high-bandwidth memory (HBM) and has a competitive advantage as one of the "big three" companies manufacturing HBM.
- AMD is positioned to compete against Nvidia with its upcoming MI450 AI accelerator and has shown significant improvement in its client, gaming, and embedded segments.
- Both Micron and AMD have shown strong revenue growth and are expected to continue growing rapidly, making them potential candidates to outperform Nvidia.
Introduction to the Market
Nvidia is the undisputed leader of the lucrative artificial intelligence (AI) accelerator market, with a market cap of $4.6 trillion. However, as stated in the article, "at a $4.6 trillion market cap, doubling the stock price once would take the market cap to $9.2 trillion," which is a significant milestone that may be difficult to achieve. This has led investors to consider smaller companies that can more easily achieve higher-percentage growth, and to that end, these companies could outperform Nvidia. The article notes that "investors may want to consider smaller companies that can more easily achieve higher-percentage growth, and to that end, these companies could outperform Nvidia." Two companies that are worth watching are Micron and AMD, both of which have shown strong growth potential in the AI market.
Micron’s Growth Potential
Micron develops high-bandwidth memory (HBM), which is heavily in demand due to the boom in AI-capable data centers. According to the article, "the memory industry is objectively more cyclical than the tech industry at large," but Micron’s competitive advantage as one of the "big three" companies manufacturing HBM is expected to blunt the impact of industry cycles. The company’s revenue has shown significant growth, with a 57% increase in the first quarter of fiscal 2026 compared to year-ago levels. As the article states, "revenue of $13.6 billion rose 57% compared to year-ago levels," and "its $5.2 billion in net income was far above the $1.9 billion earned in the same quarter last year." The article also notes that "analysts forecast a doubling of revenue during the fiscal year," which suggests that Micron’s growth is expected to continue. With a price-to-sales (P/E) ratio of 34, barely above the S&P 500 average, Micron’s valuation implies that the stock’s rapid growth should continue for the foreseeable future.
AMD’s Competitive Advantage
AMD is another AI giant that has a significant shot at outperforming Nvidia. The company is expected to release its MI450 AI accelerator later this year, which could outperform Nvidia’s upcoming Vera Rubin platform. As the article states, "according to the company, it could outperform Nvidia’s upcoming Vera Rubin platform, and since AMD’s accelerators are significantly less expensive than Nvidia’s, that could significantly increase AMD’s market share." Additionally, AMD operates client, gaming, and embedded segments, which have shown significant improvement in recent quarters. The company’s revenue grew by 36% yearly in the third quarter of 2025, with net income of $1.2 billion. The article notes that "the 61% yearly profit growth was close to Nvidia’s 65% net income increase over an overlapping period," which suggests that AMD is well-positioned to compete against its larger rival. While AMD’s 115 P/E ratio may not portray its valuation favorably, its forward P/E of 35 implies that the company can grow its profits rapidly.
Conclusion and Future Outlook
In conclusion, both Micron and AMD have shown strong growth potential in the AI market and are worth watching as potential candidates to outperform Nvidia. As the article states, "these companies could outperform Nvidia," and with their strong revenue growth and competitive advantages, they are well-positioned to achieve higher-percentage growth. The article notes that "investors may want to consider smaller companies that can more easily achieve higher-percentage growth," and Micron and AMD are two examples of companies that fit this criteria. With the AI chip market expected to grow at a compound annual growth rate (CAGR) of 29% through 2030, these companies are likely to continue growing rapidly and may outperform Nvidia in the future. As the article states, "the AI chip market expected to grow at a compound annual growth rate (CAGR) of 29% through 2030," which suggests that the growth potential for these companies is significant.
https://www.fool.com/investing/2026/01/20/2-artificial-intelligence-stocks-to-buy-in-2026-th/