Nvidia (NVDA) is poised to release its fiscal first-quarter 2027 results on May 20, with shares climbing approximately 21% year-to-date and approaching record highs. The company anticipates revenue of around $78 billion, reflecting a robust 75% year-over-year growth. However, concerns are emerging as major customers, including Google and OpenAI, are increasingly developing their own AI chip alternatives, which could threaten Nvidia’s market dominance.
While Nvidia’s recent performance has been strong, with a record $68.1 billion in fiscal fourth-quarter revenue, the stock’s high price-to-earnings ratio of about 46 raises questions about its valuation sustainability. The growing competition from companies like Broadcom, which has secured long-term agreements with key clients, suggests that Nvidia’s pricing power may face pressure as alternatives become viable.
In contrast, Amazon (AMZN) presents a compelling investment opportunity in the AI chip space. With its custom chip business exceeding a $20 billion annual revenue run rate and significant growth potential, Amazon’s diversified operations and more attractive valuation at approximately 32 times earnings make it a more appealing choice for investors looking to capitalize on the AI chip boom.
Source: fool.com