2 hours ago
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Marc Guberti, The Motley Fool
Mon, April 27, 2026 astatine 7:40 AM CDT 5 min read
Nvidia (NASDAQ: NVDA) banal has gained much than 1,000% implicit the past 5 years, giving it a full instrumentality much than 10 times arsenic large arsenic the S&P 500 over that period. It present accounts for astir 8% of the famed index's value, truthful its show plays a large relation successful however good the wide marketplace benchmark performs.
However, investors successful hunt of higher aboriginal returns whitethorn privation to gravitate toward smaller artificial quality (AI) stocks. These companies don't request arsenic overmuch capitalist superior to make meaningful terms movements compared to Nvidia, with its $5 trillion marketplace cap.
Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected a little-known company, called an "Indispensable Monopoly," providing the captious exertion Nvidia and Intel some need. Continue »
In my view, these 3 smaller AI companies person what it takes to outperform Nvidia banal implicit the adjacent 5 years.
Nvidia's GPUs tin supply the processing powerfulness required to grip aggravated AI workloads, but to beryllium effective, they besides request representation retention solutions similar the ones Sandisk (NASDAQ: SNDK) provides. Sandisk develops and manufactures NAND flash representation chips that spell wrong AI chips and platforms similar the caller Vera Rubin architecture.
While Sandisk faces immoderate competition, it's a beauteous tiny field. The apical 5 NAND flash representation manufacturers power much than 90% of the planetary NAND market. This hardware's value to the AI build-out, combined with constricted competition, is portion of the crushed wherefore Sandisk is up by astir 3,000% implicit the past year.
Recent fiscal results suggest that its rally tin continue. The institution delivered 61% year-over-year gross maturation successful its fiscal 2026 2nd 4th (which ended Jan. 2), and 672% nett income growth. These results bespeak that Sandisk's profits are increasing faster than Nvidia's. Its 31% sequential maturation was besides amended than the 20% sequential maturation Nvidia delivered successful its fiscal 2026 Q4 (which ended Jan. 25).
Sandisk's guidance calls for $4.6 cardinal successful fiscal Q3 gross astatine the midpoint, implying 52% sequential growth. A cardinal portion of the AI boom, the institution is increasing faster than Nvidia but trades astatine a little guardant price-to-earnings (P/E) ratio. Sandisk is 1 of the fewer stocks that has much going for it contempt producing a 30x instrumentality wrong 1 year.
Nebius (NASDAQ: NBIS) is simply a neocloud supplier that supplies tech companies with capableness astatine AI information centers. It expects to wrapper up 2026 with much than 3 gigawatts of secured power, and arsenic overmuch arsenic 1 gigawatt of connected power. It ended 2025 with 170 megawatts of progressive information halfway power, truthful arsenic its build-out proceeds to let it to person that imaginable into operating information halfway infrastructure, Nebius volition beryllium capable to make substantially much recurring revenue.
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