Kids have played "King of the Hill" for years. The game's goal is for one player to try to remain at the top of the hill while other players attempt to take their place.
Companies play this game too. And in artificial intelligence (AI), Nvidia(NASDAQ: NVDA) reigns as king. So far, no rival has been able to knock the chipmaker off its perch at the top.
However, Nvidia might not be the best AI stock to own in the near term. Here are three AI stocks Wall Street thinks will outgain Nvidia over the next 12 months.
1. Advanced Micro Devices
Advanced Micro Devices(NASDAQ: AMD) is one of Nvidia's biggest rivals. It's way behind Nvidia in the AI chip market. While AMD stock has soared over the last 12 months, Nvidia has outperformed it by a wide margin.
However, Wall Street thinks that could change. The consensus 12-month price target for AMD reflects an upside potential of nearly 16%. That's a much more bullish outlook than the expected gain of less than 11% implied by the average analysts' price target for Nvidia.
Why do many analysts favor AMD over Nvidia over the next year? Much of their optimism stems from AMD's introduction of its new AI chips. In December, AMD rolled out its Instinct MI300X chip. Tech giants including Meta Platforms, Microsoft, and Oracle plan to use this new chip. A few days ago, AMD also unveiled its Ryzen Pro AI chips for desktops and laptops. The company has great expectations for the AI PC market.
2. Intel
Intel(NASDAQ: INTC) once held the spot as the undisputed king in the global chip market. However, technology changes and some poor decisions by the company have changed the game. Intel's modest gains over the last 12 months reflect the new reality.
Analysts look for the outlook for Intel to improve, though. The average 12-month price target for the stock is 18% above the current share price. One especially bullish analyst projects that Intel could skyrocket by nearly 80%.
It's not shocking that many Wall Street are newly enamored with Intel. Earlier this month, the company introduced its Gaudi 3 AI accelerator. Intel claimed that the chip delivered 50% better inference and 40% better power efficiency on average than Nvidia's flagship H100 GPU -- but "at a fraction of the cost."
3. UiPath
Unlike AMD and Intel, UiPath(NYSE: PATH) isn't a direct competitor with Nvidia. Instead, the company is a leader in the robotic process automation (RPA) market. UiPath uses AI to automate a wide range of online tasks. Its strategic partners feature of "who's who" of top-tier technology consultants, including Accenture, Deloitte, and IBM.
UiPath's shares have retreated significantly after delivering huge gains in recent months. However, Wall Street expects a big rebound. The average 12-month price target for the stock reflects an upside potential of 45%. Even the most pessimistic analyst surveyed by LSEG thinks UiPath's shares can jump 24% over the next 12 months.
There are several reasons analysts like UiPath. The company's sales are growing rapidly -- 31% year over year in 2023 Q4. UiPath recently achieved its first quarter of profitability since its IPO in 2021.
Is Wall Street right about these AI stocks?
We'll have to wait 12 months to see if Nvidia, AMD, Intel, and UiPath deliver gains anywhere close to analysts' price targets. A lot could happen in the near term that helps or hurts any of these companies.
However, I think Wall Street's bullish views about these AI stocks are justified over the long term. Nvidia, AMD, and Intel should have tremendous opportunities with the rising demand for AI chips. UiPath should benefit from the growing adoption of AI-powered process automation. I'm not sure which of these stocks will be the "King of the Hill" next year or a decade from now, but I suspect they'll all be solid winners.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights has positions in Meta Platforms and Microsoft. The Motley Fool has positions in and recommends Accenture Plc, Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, Oracle, and UiPath. The Motley Fool recommends Intel and International Business Machines and recommends the following options: long January 2025 $290 calls on Accenture Plc, long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2025 $310 calls on Accenture Plc, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
