Not Nvidia, Not Micron. This Magnificent Warren Buffett Stock Could Be the Quiet Winner of the AI Arms Race -- Here's the Case.
Nvidia and Micron have become two darlings of the artificial intelligence revolution, but there are more attractive opportunities beyond semiconductors.
Overview
When ChatGPT burst onto the scene in late 2022, investors did not waste time picking which tech companies they thought would be winners from the new artificial intelligence (AI) trend. At first, the market went shopping for pick-and-shovel companies. Nvidia (NASDAQ: NVDA) sells the graphics processing units (GPUs) that provide the computing power to train and run generative models. Micron Technology (NASDAQ: MU) sells the high bandwidth memory (HBM) and DRAM that store and rapidly supply the vast quantities of data that those processors work on.
Since the AI revolution started roughly three-and-a-half years ago, the scoreboard has been almost cartoonish. Since ChatGPT's public release, Nvidia stock has risen 1,290%, while Micron has soared 1,630%. These are not typical numbers, even for a bull market.
Details
The reason behind their parabolic ascents is simple. Hyperscalers are spending more than $700 billion annually on AI infrastructure, and large slices of those checks are being allocated to GPUs, CPUs, HBM, and DRAM. Nvidia dominates the accelerator conversation, while Micron is one of only three companies that make the memory stacks that sit next to Nvidia's chips. As long as Amazon, Microsoft, Meta Platforms, and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) keep building data centers, Nvidia and Micron will continue cashing the invoices.
Source
Originally published at www.fool.com.