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These three artificial intelligence (AI) stocks will overtake Nvidia in the next five years

After rising more than seven times since the end of the third quarter of 2022, Nvidia is now close to correction area. The high-flying stock could fall even further.

Investors could choose to buy Nvidia in a pullback. That could be a smart move in the longer term. However, there are other artificial intelligence (AI) stocks to consider. I predict the following three AI stocks will beat Nvidia over the next five years.

1. Alphabet

Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has been a big winner of the AI ​​boom, with shares up more than 40% in the past twelve months. While this performance won’t come close to Nvidia’s, Alphabet could gain steam while Nvidia loses some momentum.

Rating is a top consideration. Nvidia trades at nearly 35x revenue, while Alphabet’s price-to-sales ratio is below 6.5. Of course, I expect Nvidia to generate stronger revenue growth than Alphabet in the coming years. However, Nvidia stock is priced for perfection – and most companies don’t deliver perfection for long.

Alphabet has become almost an AI underdog in the minds of some investors after public embarrassment with its generative AI models. However, don’t underestimate the company’s AI expertise. Apple According to Bloomberg, Google Gemini could be implemented in its iPhones. If this happens, I think it will be a major catalyst for Alphabet stock.

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I also think Waymo will become a major growth driver for Alphabet over the next five years. Cathie Wood’s Ark Invest expects the robotaxi market to reach $10 trillion in revenue by the early 2030s. I’m not as optimistic, but I still expect this market to take off, with Waymo one of the biggest beneficiaries.

2. Metaplatforms

Metaplatforms (NASDAQ: META) has been one of the best performing mega-cap stocks not named Nvidia. The social media giant’s shares are up almost 140% in the past twelve months, and I think Meta has more room to run.

Like several other major tech companies, Meta is trying to reduce its dependence on Nvidia’s GPUs by using its own AI chips. Like some of its peers, Meta is more attractively valued than Nvidia.

As Nvidia faces increasing competition, Meta could benefit fewer competition. A bill is pushing through the US Congress that would require Bytedance to divest TikTok or face the consequences of an effective ban in the US.

However, I don’t think Meta needs a TikTok ban to outperform Nvidia over the next five years. Meta CEO Mark Zuckerberg proclaimed last year that business messaging will be the company’s “next big pillar.” More recently, he said that smart glasses with built-in AI assistants could be Meta’s “killer app.” I suspect Zuckerberg is right on both counts.

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3. UiPath

Great AI stocks aren’t limited to mega-cap monsters. UiPath (NYSE: PAD) hasn’t delivered the level of blistering returns that Nvidia has achieved over the past twelve months, nor has it kept pace with Alphabet and Meta. However, with a market cap of just $12.4 billion, UiPath could grow much bigger in the next five years.

I recently wrote that UiPath was my pick for the best AI stocks to buy right now. The relatively small size was a key factor in my selection process. More importantly, I view UiPath as an AI company on the rise and in the early stages of growth.

UiPath is the leader in robotic process automation (RPA), and this market is expanding by leaps and bounds. Unsurprisingly, UiPath continues to deliver exceptional revenue growth, with fourth quarter revenue rising 31% to a record high. The company also achieved profitability for the first time – a major milestone that could set the stage for accelerated stock gains.

Rapid advances in AI are allowing the company to automate business processes that it couldn’t do in the past, and UiPath is seizing this opportunity. It launched Clipboard AI last year, with TIME magazine named it one of the best inventions of 2023. UiPath also introduced its AutoPilot AI-powered assistant in the fourth quarter.

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Alphabet, Apple and Meta Platforms. The Motley Fool holds positions in and recommends Alphabet, Apple, Meta Platforms, Nvidia, and UiPath. The Motley Fool has a disclosure policy.

Prediction: These 3 Artificial Intelligence (AI) Stocks Will Overtake Nvidia in the Next Five Years Originally published by The Motley Fool

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