Prediction: This artificial intelligence (AI) stock will outperform Nvidia by the end of the year

NVIDIA (NVDA -4.08%) The company has outperformed other artificial intelligence (AI) stocks over the past few years thanks to its leadership in the field: The company controls 80% of the AI ​​chip market and has achieved triple-digit revenue growth every quarter. As a result, its stock price has soared more than 2,200% over the past five years.

By comparison, the shares of other big tech companies, including Apple and Alphabet, have seen double- or triple-digit gains over the same period.

I expect NVIDIA to remain a winner in the long term, but other stocks may take the lead between now and the end of the year. Investors are concerned about NVIDIA’s reliance on AI revenues and competition in the chip market in an uncertain economic climate. Indeed, NVIDIA is already losing momentum, down 12% in the past three months.

So investors might turn to another company that’s benefiting from the AI ​​boom but also has billions of dollars in revenue from other businesses. This company may be more resilient in difficult or uncertain economic times, and my prediction is that this AI stock will outperform Nvidia by the end of the year. Let’s take a closer look.

Image source: Getty Images.

This strain is well known

The stock predicted to surpass Nvidia by the end of the year is Amazon (AMZN -3.65%)Its fast-growing e-commerce business sells essentials, general merchandise, and even a range of devices, books, and movies, and it’s especially known for its Prime membership service, which has more than 200 million members.

This helped Amazon report more than $121 billion in North American and international revenue in the most recent quarter, with year-over-year increases in both segments.

The company also has another sales event planned for October called Prime Big Deal Days, which could help boost Prime sign-ups even further in the coming weeks. These events, which feature bargain deals exclusive to Prime members, have been known to boost membership to the service.

Even better, Amazon typically does well when it comes to member retention: According to Statista, 72% of users signed up for the service after a 30-day trial period last year.

Regardless of the economic situation, customers find value in Prime membership because they can buy essentials at great prices and get fast, free delivery.

In addition to this reliable and stable revenue stream, investors are also benefiting from growth from its cloud computing business, Amazon Web Services (AWS), where the company’s AI strength lies. AWS offers a wide range of cloud services and has made a big push into AI, selling its own low-cost chips, premium Nvidia chips, and a full-service AI platform called Amazon Bedrock.

Executives say they aim to be involved in every layer of AI, from the chips to the power programs to the apps.

Amazon’s profit engine

All of this has helped AWS hit $105 billion in annualized revenue this year, which is especially important because AWS has traditionally been Amazon’s profit driver: In the most recent quarter, AWS operating profit accounted for 63% of the company’s total profit.

Nvidia’s growth has surprised investors lately by outpacing that of Amazon and other tech companies. But as sentiment turns cautious, investors may turn to companies like Amazon that are involved in AI but aren’t as reliant on it as Nvidia is. Currently, the two companies trade at roughly the same level, at 37 times forward earnings, so Amazon might seem like a safer bet based on the stock price.

This doesn’t mean that Nvidia and the AI ​​market won’t deliver on its promise in the coming years, and I am confident that short-term uncertainty in the market won’t change this exciting long-term story.

But my guess is that Nvidia’s recent slowdown may give it some room to jump ahead in stock price growth over the coming months, with Amazon likely to take the lead.