Here’s Why Kinaxis Stock Could Be the Next Nvidia

Nvidia stock has exploded over the last few years, but it may now be too expensive for any real returns.

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Nvidia (NASDAQ:NVDA) stock continues to be one of the top-performing stocks out there. The tech stock provides the basis of practically every type of computing system we use through its graphics processing units (GPUs). These GPUs are in incredibly high demand, as they provide the backbone for gaming, data centres, and professional visualization. So while other tech stocks fall around it, Nvidia stock continues to be up 195% year to date, and 574% in just the last five years.

It’s not just the continued demand, but continued necessity of these GPUs that have led to the climbing share price of Nvidia stock. Analysts continue to recommend the company as a strong buy, as it has solid financials and its future outlook looks bright.

But it can’t be denied that Nvidia stock is now expensive. Therefore, here’s another company investors will want to consider.

Kick it up with Kinaxis stock

If you’re looking for growth through the use of artificial intelligence (AI), then Kinaxis (TSX:KXS) could be a far better option. While Nvidia stock is certainly still a great choice, Kinaxis stock has far more of a growth opportunity that investors can consider.

In fact, Kinaxis stock checks the boxes on several future-focused, trending categories. The company is a supply-management software-as-a-service (SaaS) platform. It helps with end-to-end solutions for large, enterprise-level businesses around the world. It also uses AI to help evaluate, alert, and respond to issues that come up for its clients applying high-speed analytics.

Of course, it’s the supply-chain part that investors might recognize from about two years back. During the pandemic, Kinaxis stock rose as the company helped move along supply-chain issues for companies. Yet, it then dropped in the post-restriction pandemic meltdown.

Since then, Kinaxis stock has recovered somewhat. Yet, we’re still far off from those all-time highs. Shares are up 34% year to date, and 155% in the last five years alone. So it still has plenty of room to play catch up to a major company like Nvidia stock.

Compare and contrast

During the most recent earnings report, Kinaxis stock saw its SaaS revenue increase by 28% year over year. Its adjusted earnings before interest, taxes, depreciation and amortization also rose by 17%. Annual recurring revenue climbed 23%, and it managed to sign on some major brands such as Restaurant Brands International. Still, profit was down by 12% as the company looks to recover from poor past performance. That being said, it looks like it should be a stellar full-year 2023, with expected total revenue between $425 and $435 million.

Compared to Nvidia stock then, let’s see where Kinaxis stock lies. Nvidia stock during its latest earnings report came out with revenue 19% higher than the previous quarter. It achieved record data centre revenue at US$4.3 billion, with a second quarter revenue outlook looking to reach US$11 billion.

That being said, revenue was down 13% from the year before. In fact, many numbers were up quarter over quarter, but down year over year. Importantly, that didn’t include net income, which was up 26% compared to 2022 levels.

Bottom line

Nvidia stock certainly has more room to run. But if you’re looking for a deal, I would go with Kinaxis stock. This company is just starting to show major signs of recovering, bringing on larger and larger clients and seeing recurring revenue increase. It continues to chip away at its debt, and should be profitable in the next year once more. Meanwhile, Nvidia stock may simply be too expensive to see the same incredible growth we’ve been used to over the last five years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Kinaxis. The Motley Fool recommends Kinaxis, Nvidia, and Restaurant Brands International. The Motley Fool has a disclosure policy

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