Better Buy (2024 Edition): Shopify or Nvidia Stock?

Shopify (TSX:SHOP) isn’t the only red-hot tech stock in town that could add to recent gains.

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The tech rebound seems to be in full swing, with mega-cap tech strength starting to spread to some of the smaller players in the sector. Undoubtedly, Shopify (TSX:SHOP) is Canada’s tech heavyweight, with its impressive footing in the e-commerce market.

Shopify stock

As Shopify continues to invest in payment tech, it can easily expand its market. Undoubtedly, the e-commerce market touches many other high-tech corners that could unlock new growth sources.

Of course, artificial intelligence (AI) seems to be a growth lever that most others are eager to pull right now. In many ways, the AI rush is reminiscent of the mid- to late 1990s that preceded the dot-com bust.

Shopify stands out as a firm that actually can benefit by leaps and bounds from the rise of the technology. With AI thrown into the mix, Shopify merchants won’t just be able to get up and running online faster and more efficiently; they may just be able to get the help to jolt sales. That’s a potentially big deal.

In 2023, things hardly turned a corner for digital retail. Consumers are still in a tough spot right now, and it’s unclear when things will be booming again, as they were in 2021. Regardless, Shopify deserves praise for how it’s been managing through a period of sub-par economic growth. Once the consumer is ready to spend again, Shopify is well positioned to capture more share in the e-commerce and payments markets.

As long as the company invests in its future, it can keep that growth alive. For most of 2022, it really did seem like the company had lost its way. Acquiring its way into fulfillment seemed like a bizarre move to me. Now that the firm has corrected course, investors have been more than willing to get back into the hot Canadian tech titan.

Is it too late to do so in late November 2023, though?

In mid-2022, I urged investors to consider loading up on Shopify stock before it had a chance to heat up again, perhaps to the $100 mark. Today, the stock is at $96 and change, and with recent momentum, it seems like the $100 level could be hit by year’s end. Perhaps with a bit of help from a Santa rally, Shopify stock may be able to complete its return to the triple digits.

Nvidia stock

Nvidia (NASDAQ:NVDA) stock has been arguably the hottest mega-cap AI stock pick for 2023. Year to date, shares of the semiconductor giant are up more than 230%. That’s an absurd gain that probably won’t be topped in 2024.

Does that mean Nvidia stock’s best days are behind it? It’s hard to tell. The company seems to be miles ahead of the competition when it comes to AI chips. If it can retain the gap and demand stays hot over the next few years, Nvidia stock could keep adding to its gains.

However, the price of admission is uncomfortably high for me to justify getting in right now. I think the easy money has been made and would worry about the downside risks after more than doubling many times over since its October 2022 lows.

Better buy? NVDA vs. SHOP stock

Due to overvaluation concerns, I favour Shopify stock over Nvidia. There’s just too much AI euphoria in Nvidia right now. And though Shopify stock is also quite hot, it’s still miles off its own all-time highs, whereas Nvidia is fresh off a new high just north of $500.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

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