NVIDIA has experienced a remarkable surge in its stock price following its recent split, closing Friday at $131.88—a significant increase from the adjusted price of $94.95 on May 22nd. This growth is attributed to the company’s strong earnings report and the increasing demand for AI technology. Investors are now considering whether to hold onto their shares or look for other opportunities. Here are three alternative AI stocks for those seeking diversified investment options.
NVIDIA’s meteoric rise is not unprecedented. Previous stock splits and earnings reports have resulted in similar spikes in its share price, reflecting investor confidence in the company’s growth potential. A few years ago, NVIDIA also benefited from the burgeoning gaming industry, which significantly contributed to its revenue. Currently, the company is riding the wave of AI advancements, much like it did with gaming technology in the past.
Comparing to past trends, Celestica, Vertiv, and Taiwan Semiconductor have also shown resilience and growth in related markets. Celestica’s focus on data centers and Vertiv’s advancements in liquid cooling technology echo patterns seen in NVIDIA’s historical growth, driven by innovation and market demand. These companies are now positioned to capitalize on the increasing complexities in AI infrastructure, much like NVIDIA did with gaming GPUs.
Celestica’s Growth Through AI Demand
Celestica, an original design manufacturer (ODM), has gained attention due to its strong partnerships with tech giants like Google (NASDAQ:GOOGL). The increasing complexity of AI-driven data centers is boosting demand for their services. In the last quarter, Celestica’s sales surged by 20%, and operating income grew by 114%. The company has raised its revenue guidance to $9.1 billion, reflecting the robust market conditions.
As data centers become more intricate, components like liquid cooling are becoming essential. Celestica’s forward estimates suggest continued underestimation by Wall Street, presenting an opportunity for growth. Trends in AI data center build-outs are expected to drive further increases in the company’s financial performance.
Vertiv and Liquid Cooling Market Potential
Vertiv is set to benefit from the growing need for liquid cooling systems in data centers, a market projected to grow at a 54% CAGR from 2023 to 2028. AI chips’ higher power consumption and heat generation require more efficient cooling solutions. Liquid cooling, which is more effective and power-efficient than traditional fan systems, is becoming essential for future data centers.
Vertiv’s dominant position in coolant distribution units has resulted in shares rising significantly over the past year. Despite the impressive performance, the company’s forecasted net income growth suggests further potential. As the cooling market expands, Vertiv’s profits are expected to grow at a CAGR of 36%, making it a strong candidate for investment.
Taiwan Semiconductor’s AI Advancements
Taiwan Semiconductor remains a core holding for many investors due to its leadership in cutting-edge semiconductor manufacturing. The company is poised to benefit from Apple (NASDAQ:AAPL)’s anticipated AI-driven iPhone upgrades and has received approval from NVIDIA’s CEO to raise prices. Additionally, challenges faced by Samsung in ramping up semiconductor production strengthen Taiwan Semiconductor’s competitive advantage.
Wall Street may still be underestimating Taiwan Semiconductor’s profit potential, with current trading at 18.7X 2025 earnings. As AI demand continues to surge, the company is expected to see substantial growth, making it an attractive investment option.
Key Inferences
– NVIDIA’s stock rise highlights the growing investor confidence in AI technology.
– Celestica’s partnerships and data center solutions position it well for future growth.
– Vertiv’s focus on liquid cooling technology presents a significant market opportunity.
Investors looking to diversify their portfolios in the AI sector should consider companies like Celestica, Vertiv, and Taiwan Semiconductor. Celestica’s strong market relationships and increasing data center demands, Vertiv’s dominance in the liquid cooling market, and Taiwan Semiconductor’s leadership in advanced chip manufacturing offer promising growth opportunities. These companies are well-positioned to benefit from the ongoing advancements in AI technology, much like NVIDIA has historically done. Keeping an eye on these stocks could provide valuable returns as the AI market continues to expand.
