Nvidia has become one of the most precious companies in the world thanks to the AI movement, but the business growth of the company seems questionable.
The actions of Megacap technology were among the largest and oldest beneficiaries of the Revolution of Artificial Intelligence (AI). While the growth actions of the technology sector have at least experienced a certain form of action since AI has become a megatend, these gains were ephemeral for most companies – leading to prolonged periods of excessive volatility.
But for Big Tech, the gains have been quite stable in the past two years. The company that has appreciated the most upwards so far is the semiconductor power Nvidiawhich has seen its market value increase by billions of thousands – by making one of the The most precious companies in the world.
Although the possession of Nvidia’s actions has helped certain investors make unprecedented gains and wealth, I see a member different from “Magnificent seven“As the best long -term opportunity. Let’s explore the dynamics between Nvidia and Amazon (Amzn -2.61%)) And to assess why electronic commerce and darling at Cloud Computing could be the most precious company by the next decade.
Why the growth of Amazon seems ready to accelerate
Over the past two decades, Amazon has extended far beyond its electronic commerce market. Today, the company operates through cloud computing infrastructures, advertising, streaming and entertainment, logistics, grocery delivery, subscription services, etc. By diversifying its ecosystem, Amazon has acquired a lucrative combination of detail and business consumers.
For a few years now, Amazon has discreetly poured billions in a number of initiatives related to AI when it begins to build the next phase of its activities. Some of the higher priority movements that the company has made includes the investment of $ 8 billion in a start-up called AnthropicWho has become a full component of the company’s cloud computing platform, Amazon Web Services (AWS).
Amazon has also focused on building AI data centers, its own range of personalized silicon chipsets and double Robotics automation process for its execution centers.
AMZN Revenue (quarterly) data by Ycharts
If you look at income and profits trends, you might be wondering why Amazon makes these investments in the first place. Well, simply check the disparity between the growth of Nvidia and that of Amazon. It is clear that the slopes of NVIDIA income and profits lines are much more steep than Amazon.
That said, I would warn investors against the rejection of Amazon’s potential. Operating income and benefits in AWS have accelerated considerably since the anthropic partnership started a few years ago. In addition, Nvidia sells some of the most important hardware and software elements necessary to develop an AI. In other words, Nvidia appreciated faster gains compared to its peers because companies need their products. Amazon, on the other hand, has spent the last two years building new products and services that have not yet changed completely.
For these reasons, I think that Amazon is at the start of a new period of exponential growth. Below, I will detail why Nvidia can look at a considerable slowdown in the coming years.
Why the growth of Nvidia could start to stall
The main rear wind that feeds Nvidia’s activities in the past two years is the demand for calculation and networking equipment for data centers. Companies that invest in AI infrastructure count strongly on chipsets called graphic processing units (GPU), which is a material that Nvidia specializes in design.
For a while, Nvidia had the luxury of practically no direct competition. This provided the company with a huge negotiation currency in the form of pricing – Enclude essentially a bonus for its GPUs, companies around the world have aligned themselves to buy them.
Although the launch of Nvidia’s new GPU architecture, Blackwell, is solid, I am starting to wonder how long the pricing power of the business will last. Advanced micro-apparents Finally launched its own competing GPU range, the accelerators of the MI300. Although the GPU activity of the AMD data center is much slower than that of Nvidia, it develops at a rapid clip while maintaining profitability. In addition, AMD is able to compete with Nvidia with regard to the price – which helped the company Oracle,, Meta-platformsAnd Microsoft as early adopters of MI300 architecture.
Beyond direct competition, other hyperscalers such as Microsoft and Alphabet join Amazon to develop their personalized silicon chips. With the addition of more chipsets that arrive on the market, Nvidia faces the risk that companies begin to see the GPUs as a merchandise piece of equipment.
Consequently, NVIDIA may be forced to loosen its price structure in order to remain competitive in the GPU field – a dynamic that will probably start to show a significant deceleration between sales and beneficiary margins.
Image source: Getty Images.
Take a look at the evaluation disparity
The graph below illustrates the Price to profits (P / e) Ratio for Amazon and Nvidia in the past three years. It is interesting that the current sale in the Nasdaq converged the multiple p / e of the two companies at the same value (oscillating around 30 years old). In other words, although NVIDIA’s market capitalization of 2.3 billions of dollars is much higher than $ 1.8 billion of Amazon, the two companies are evaluated similarly on a P / E basis.
NVDA PE ratio data by Ycharts
Although I think each action is ready for a rebound, I think investors can start applying more control over Nvidia. The griping company for two years and the momentum was surely going to address at some point.
Now that more competition is starting to enter the main Nvidia market, the company will have to invest in other areas of the AI landscape in order to continue to gain the enthusiasm of growing investors. On the other hand, Amazon has already made a number of investments – many have not yet changed and fully bear fruit.
For these reasons, I think Amazon is the best purchase and maintenance That Nvidia at the moment, because I think that the company is positioned to accelerate both sales and profits for the years to come – thus controlling a prime multiple on its peers at the bottom of the road.
John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Randi Zuckerberg, former Director of Development of the Facebook and Sister of the CEO of Meta Platforms, Mark Zuckerberg, is a member of the board of directors of Motley Fool’s. Adam Spatacco has positions in Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool has positions and recommends micro Advanced, Amazon, Meta Platforms, Microsoft, Nvidia and Oracle. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.