Should You Forget Nvidia and Buy These 2 Artificial Intelligence (AI) Chip Stocks Instead?
2026-10-09 10:15
•Geoffrey Seiler •The Motley Fool
•••• ••••• Axe Cap view
Look Beyond Nvidia: Two AI Chip Stocks Worth Watching
Nvidia dominates AI training chips, but AMD and Cerebras could unlock bigger gains in AI inference over time.
Nvidia is the obvious giant in AI chipsets and trades at a reasonable 15x forward earnings. Its grip on the AI model training market and well-rounded infrastructure make it hard to bet against. But its sheer size and maturity limit explosive growth from here. AMD is quietly carving a niche in the faster-growing AI inference space, landing lucrative deals with OpenAI and Meta. Its smaller market cap means more room to run if these partnerships pay off. Then there's Cerebras, with mind-boggling inference speeds via radical wafer-scale chips. It’s more speculative given execution risk and a niche foothold, but a $10 billion OpenAI deal signals serious potential. For South African investors, these developments suggest a watchful eye on USD/ZAR swings, as chip sector uncertainty pairs with broader tech trends affecting offshore earnings from companies like Naspers/Prosus. Still, the Nvidia juggernaut remains a tough act to beat. this is just our opinion and not financial advice
Buy AMD on the conviction in inference AI with a smaller starting base for growth. Hold Nvidia for steady AI exposure but trim any positions looking fully priced. Keep Cerebras on the watchlist for a high-risk, high-reward play. Hedge USD/ZAR exposure as chip sector moves could impact rand-linked tech earnings.
- AMD
- NVDA
- USD/ZAR
- Execution risk at Cerebras limits mainstream AI adoption
- USD/ZAR volatility could undermine offshore tech earnings
- Nvidia’s dominance may cap upside for smaller competitors
6/10
While Nvidia remains a strong AI chip stock with leadership in GPU training and a cheap valuation at 15x forward P/E, smaller competitors AMD and Cerebras could potentially outperform over the next decade. AMD, valued at one-fifth of Nvidia's size, is positioned well in the faster-growing inference market through strategic acquisitions and major deals with OpenAI and Meta. Cerebras, with a sub-$40B market cap, offers ultrafast inference speeds but faces execution risks in mainstream adoption.
Our take is based on reporting first published by The Motley Fool.