A decade ago, if you asked anyone, from Warren Buffett to a novice investor, which stock they would invest in, one name shone in each portfolio: Apple (NASDAQ:AAPL). Seven years later, Nvidia (NASDAQ:NVDA) replaced Apple and became the first company to reach a $4 trillion market cap and a stock in every investor’s portfolio. There is no denying that Nvidia is a great company. It has its competitive advantage in the artificial intelligence (AI) game, remains unbeatable so far, and continues to innovate to stay ahead in the game.
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Nvidia is a great company
You may also think that if I own only Nvidia, I am set for life. But the truth is that there are still some stocks that are better investments. Every company reaches a stage of maturity where technology stagnates or another player kicks-starts a whole new revolution.
Let us not go far; you have the best examples right above. Apple was among the first adopters of AI with its AI assistant Siri. Yet its stock didn’t soar because of Siri. The stock soared because of the secure iOS, innovation, design, and brand loyalty towards iPhone and Apple Watch. Meanwhile, Nvidia soared for its gaming graphics cards, crypto mining, and AI data centre units. Nvidia has yet another tech up its sleeve: autonomous cars.
NVIDIA’s stock can continue to give you growth as AI adoption widens with new applications and tech upgrades. However, being everyone’s darling comes at a cost of high valuation. Investors are expecting the high growth in earnings per share (EPS) to continue. Nvidia’s diluted EPS surged 600% in fiscal 2024, 147% in fiscal 2025, and 44% in the first half of fiscal 2026. No company can sustain high growth for a long time.
Nvidia has grown too big
The fact that Nvidia’s stock is trading at a 12-month forward price-to-earnings (P/E) ratio of 38 times and a five-year price-to-earnings growth (PEG) of 1.27 times shows that investors have priced in very high EPS growth. This high valuation, although justified, reduces the upside potential for Nvidia.
If you look at Apple’s five-year stock price momentum pre- and post-pandemic, the stock surged 300% between September 2015 and 2020. However, the upside potential slowed to 103% between September 2020 and 2025.
But I think this stock is a better investment
In the world of investing, a better investment is silent, boring, something not many know about, or a stock overshadowed at times. While Nvidia is a stock to stay invested in, as it will give growth, Advanced Micro Devices (NASDAQ:AMD) is a better investment for the next big upside.
Back in 2014, AMD was way behind in the technology race and was at the mercy of Intel and Nvidia. However, the turnaround made AMD race ahead, streamline its product roadmap, and chase opportunities that it can monetize. AMD is not a company that brings breakthrough tech, but neither was Apple nor Tesla.
Steve Jobs and Elon Musk perfected the breakthrough tech by tweaking it into something consumers could use. The Tipping Point author, Malcom Gladwell, called them the Tweakers in a November 2011 article in The New Yorker.
Is AMD a tweaker? Difficult to say.
But AMD is definitely the only company that catches the eyes of Intel and Nvidia loyalists. Analysts who downgraded AMD in 2024 for being late in the AI race have now upgraded it. AMD has launched its AI data centres and AI-powered PC central processing units (CPUs) and is just beginning the AI data centre rally.
Although it is late, it doesn’t have to face the risk of convincing clients to try new tech. The AI buzz is already in place, and it is monetizing this buzz by offering customers a less expensive yet powerful option.
Moreover, investors have not yet priced in extraordinary earnings expectations (five-year PEG of 0.48), making it a better investment for the next five-year upside potential.
