Intel (NASDAQ:INTC) has become a stock to watch in recent months. The company’s hyperfocus on artificial intelligence (AI) and chip manufacturing potentially opens up a bright future for it.
However, with negative free cash flow of $12 billion – as well as quarterly revenue and operating profits that have plunged 35% and 112%, respectively, since 2021 – it may take Intel many years to regain a leading position in the technology sector.
While Intel remains a great buy for those with time, investors with fewer years until retirement might want to consider alternative companies with more cash in the bank to invest in their future.
The graph above shows Nvidia (NASDAQ:NVDA) And Amazon (NASDAQ:AMZN) are potentially swimming in money compared to Intel. Both companies have experienced significant financial growth over the past five years, indicating that they may be better equipped to expand their technological reach at a faster pace than Intel. As a result, Nvidia and Amazon are potentially more reliable investments in the short term.
So forget about Intel for now and consider buying these two tech stocks instead.
1.Nvidia
Nvidia’s business has exploded over the past decade, with its shares up 27,000%. The company profited growing demand for graphics processing units (GPUs)chips needed for intensive computing tasks such as training AI models, running video games, video editing, cryptocurrency mining, and more.
Nvidia’s success has allowed it to become one of the most valuable companies in the world and the first chipmaker to reach a market capitalization above $3 trillion. The company’s chips have landed it lucrative positions in several technology sectors. It is best known for its dominant role in AI, outpacing competitors like Intel and Advanced microsystems in market share.
But the company has also spent years supplying its chips to cloud platforms, video game consoles as the Nintendo Switch, self-driving cars, and custom computers that many consumers use to run high-powered gaming PCs.
As a result, Nvidia has growth catalysts in the technology sector that will likely keep its business growing for years to come. According to Grand View Research, the AI ​​market reached $196 billion last year and is experiencing growth that would see that figure reach nearly $2 trillion by the end of the decade. And that’s just one path to growth.
Nvidia also has an automotive segment, which includes revenue from the sale of its chips in the self-driving car market. This industry is expected to experience a compound annual growth rate of 13% through 2030, allowing it to triple its value from its 2021 figure.
Shares have soared 206% over the past 12 months, but appear far from their ceiling thanks to significant upside in the technology sector. A 10-for-1 stock split earlier this month made the stock more accessible. At the same time, its price-to-earnings-to-growth ratio is less than one, indicating that Nvidia’s stock could be trading at a premium and is worth considering over Intel right now.
2. Amazon
Like Nvidia, Amazon has expanded into several areas of technology and seemingly can do no wrong. The company is the biggest name in e-commerce with its online retail site. Recent quarterly results show that Amazon also has a burgeoning digital advertising business through its Prime Video streaming service and hosts a highly profitable cloud platform, Amazon Web Services (AWS).
The company is on a growth trajectory that’s too good to pass up. In the first quarter of 2024, the company demonstrated that its retail business (which accounts for 80% of its revenue) remains strong, with sales up 12% year-over-year between its North American and international segments.
However, the brightest spot of the quarter was AWS, which reported revenue gains of 17% year-over-year, with operating profit nearly doubling to over $9 billion (outperforming its entire retail activity). Its cloud platform has quickly become the most profitable part of the business and is not yet complete as it invests heavily in AI expansion.
Amazon shares have soared over the past year, but likely have much more to offer investors as the company continues to grow and use its massive cash reserves. The stock’s price-to-sales ratio is currently hovering around 3, making it a better value than many of its competitors and potentially worth buying over Intel.
Should you invest $1,000 in Nvidia right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Cook has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Amazon, Apple, Microsoft and Nvidia. The Motley Fool recommends Intel and Nintendo and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short 405 calls $ in January 2026 on Microsoft. The Motley Fool has a disclosure policy.
Forget Intel: 2 Tech Stocks to Buy Instead was originally published by The Motley Fool
