Unless you have been living under the rock, you’d have heard of Nvidia’s (NASDAQ: NVDA) success story. All investors want a bite of this big business and those who missed out are now trying to grab Nvidia’s share. In the stock market, investors are attracted to tech stocks due to the massive rally we saw earlier in the year. The allure of tech stocks goes beyond artificial intelligence and while they dominate the industry, there are several other stocks worth keeping on your radar.

Key Points About This Article

• While the tech sector has seen a rally this year, there are stocks other than Nvidia worth betting on.
• Despite trading at a premium, these stocks have the potential to soar higher and could outperform Nvidia next year.
• If you are keen to know more about top growth stocks, grab a free copy of our  “The Next NVIDIA” report. The carefully curated report features a stock that has 10x potential.

These are stalwarts in their respective industries, and massive upsides can be seen in the long term. These stocks have already proved their worth and could outperform industry darling Nvidia next year. These companies also use AI to improve business efficiency and achieve growth. Let’s dive into the three stocks to buy instead of Nvidia. 

Microsoft (MSFT)

Tech dinosaur Microsoft (NASDAQ: MSFT) is valued more than Nvidia currently and it is the second-most valuable company in the world. A global name, Microsoft has a diversified range of products and services that help meet the needs of organizations. The company invested $10 billion in OpenAI last year. It then created an AI assistant known as Co-pilot which is already adopted by users. 

Trading at $408, the stock is up 10% year-to-date and 22% in the past 12 months. It has a modest dividend yield of 0.73% and is an unappreciated stock to add to your portfolio amid the recent tech selloff. I believe Microsoft is a low-risk, high-reward stock to own. 

Microsoft is also making big moves with its cloud computing segment. It owns 25% market share in the segment. In the recent quarter, Azure and cloud services revenue grew 29% year-over-year while LinkedIn revenue jumped 10% YOY. In the quarter, the company saw total revenue growth of 15% YOY to $64.7 billion and EPS came in at $2.95. 

The management mentioned that Azure AI cannot meet demand while its Azure customer base is growing at a rapid pace. Its Azure AI customers are more than 60,000, showing a 60% YOY customer growth rate. The company plans to increase spending next year to meet the strong demand. 

The recent IT outage highlighted how important Microsoft is in this world. A highly diversified business, Microsoft has seen growth across all segments and this shows that a temporary drop in revenue in one segment doesn’t impact the entire business. 

Eli Lilly (LLY)

Pharma company Eli Lilly (NYSE: LLY) is growing at a terrific rate, driven by weight loss drugs. The global obesity market has grown sevenfold in the past three years and it is expected to grow at the rate of 27% CAGR by 2028. This means the demand for obesity drugs will steadily be on the rise and Eli Lilly will be in a position to make the most of it. 

Trading at $912, LLY stock is up 54% YTD and 15% in the past month. It is inching closer to the 52-week high of $972 and is a stock split candidate. As one of the top pharma companies, Eli Lilly enjoys billions in revenue from the top two drugs- Zepbound and Mounjaro. The demand is so high for these products that Eli Lilly has to expand its manufacturing facilities. 

Eli Lilly has recently launched a new Zepbound version in single-dose vials which will be distributed directly through the company for patients with a prescription. It is lower priced than the company’s other drugs. As we have seen, even with higher-priced products, it has become difficult for Eli Lilly to meet the rising demand and this move could boost sales. 

In the second quarter, it saw a 36% YOY jump in revenue and a 68% rise in EPS to $3.28. Zepbound generated $1.24 billion in revenue and Mounjaro generated $3.09 billion. After the blockbuster results, the management raised the full-year guidance by $3 billion to $45.4 billion to $46.6 billion. 

Eli Lilly’s rally isn’t over yet and there is a lot more to come. This stock can generate solid returns and outperform Nvidia next year. 

MercadoLibre (MELI)

MercadoLibre (NASDAQ:MELI) is to Latin America what Amazon (NASDAQ: AMZN) is to the United States. The Latin American fintech and e-commerce company has seen steady growth and the stock is at an all-time high. Trading at $2,038, MELI stock is up 33% YTD and 42% in the past 12 months. The stock is an ideal candidate for a stock split.

The company has achieved tremendous success because of its presence in a difficult environment. It has minimal competition and operates in a region where there is high inflation and political instability. People in the area used cash for transactions and this is when Mercado Pago was launched. It enabled people to make digital transactions with ease. This turned into a successful fintech business which attracted more customers. Fintech was nonexistent in the area at the time of Mercado Pago’s launch and this benefitted the business significantly. 

In the second quarter, the revenue jumped 42% YOY to $5.07 billion and the EPS came in at $10.48, it was $5.16 per share in the same quarter the prior year. The e-commerce segment grew 53.4% while the fintech segment jumped 27.5% YOY. 

I believe MercadoLibre is already in a very strong position and it could keep expanding from here. The company has solid fundamentals and considering its strength, it could generate more value than Nvidia. Despite all the success it has achieved, the company has the potential to keep growing and this makes it a stock to buy and hold for the long-term.

Jefferies has a buy rating on the stock with a price target of $2,250. 

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