Three AI Stocks That Could Outperform Nvidia

The semiconductor leader Nvidia (NVDA) has experienced remarkable growth, achieving over 700% returns during what many are calling the "Age of AI." This increase means that an investment of $1,000 in Nvidia would now be worth over $80,000.

However, these impressive gains are in the past. With Nvidia's market valuation now soaring to around $3 trillion, investors looking to benefit from the predicted $15.7 trillion AI Revolution might find better opportunities in smaller companies that have more potential for growth.

Here are three stocks that could rise significantly as the AI Revolution continues to unfold.

AI Stock No. 1: Pfizer (PFE)

Pharmaceutical companies, like Pfizer Inc. (PFE), stand to gain tremendously from advancements in artificial intelligence. These companies typically invest billions each year in research and development for new drugs. AI can streamline this process, making it both faster and cheaper by allowing researchers to conduct thousands of simulations on chemical and biological reactions in a fraction of the time it would take a human team.

This potential is a major reason Pfizer has been investing in AI since 2014, long before AI tools like ChatGPT became mainstream. For example, in 2022, Pfizer committed $20 million to CytoReason, a company focused on using AI for disease modeling, and plans to increase its investments up to $100 million annually through 2027.

Pfizer's CEO, Mikael Dolsten, has recognized the impact that AI technology could have on transforming healthcare. As of today, Pfizer's stock price is around $29, and it offers a notable dividend yield of 5.75%, which is significantly higher than the average dividend yield of 1.29% for S&P 500 companies.

AI Stock No. 2: Tesla Motors Inc. (TSLA)

Tesla's stock has faced challenges recently, especially following a presentation by Elon Musk about robotaxis that did not impress investors. Despite this, the company has unveiled its Optimus robots, which are humanoid robots that could eventually take on household chores and work in various industries, including fast food.

Musk believes that the introduction of these robots could lift Tesla's market valuation to $30 trillion, presenting a potential 50-fold increase in stock value. Of course, this scenario is expected to take years to materialize, as Optimus robots are not projected to be available for retail until 2024 or later. Nevertheless, betting against Musk has not proven successful for investors since Tesla's IPO in August 2010. Many believe that Tesla still has the potential to multiply investors' returns in the future.

AI Stock No. 3: The Kroger Co (KR)

At first glance, The Kroger Co. may not seem like a tech innovator; however, it was actually the first grocery store chain in the United States to test electronic scanners back in 1972. Today, Kroger is harnessing AI technology to enhance operational efficiency. For example, it uses advanced data science to analyze information from 62 million households, which enables them to offer personalized coupons, optimize operations, and improve delivery schedules. This helps reduce waste and enhances the shopping experience for its customers.

Kroger currently engages with 23 million digitally active households annually, and its recommendation system generates an impressive 500 billion "Start My Cart" suggestions each year. As its data capabilities improve, the benefits have already started to emerge, evidenced by a 27% increase in Kroger's stock value year-to-date. Recently, the firm raised its dividend to 2.1%, surpassing the S&P 500 average. Notably, Kroger's stock has a price-to-earnings (PE) ratio of just 14, making it an attractive option for value investors when compared to the soaring prices of many tech stocks.

stocks, AI, investing