3 AI Stocks That Can Outperform Nvidia Next Year
Three AI stocks, Monolithic Power Systems, Astera Labs, and Cadence Design Systems, have outperformed Nvidia so far this year and are well-positioned to extend their rallies and outperform it in 2027.
Intelligence analysis by Llama
The three growth stocks have exposure to the AI infrastructure build-out and have seen significant revenue growth rates, making them attractive investments for those looking to outperform Nvidia next year.
Imagine you have a super powerful computer that can do lots of things at the same time. These three companies make the parts that help the computer work really well and make it even more powerful. They are doing a great job and their stocks are going up, which means people think they will do well in the future.
Analysis
A $60B Vote of Confidence
Monolithic Power Systems (MPWR) has seen a significant increase in revenue, with a 26.1% year-over-year growth in the first quarter. The company's power management systems enable data centers to maintain continuous uptime without overloading AI chips. This has led to a 40% year-to-date rally in the stock. The company's revenue growth is expected to accelerate as its two hypergrowth business segments, enterprise data and communications, continue to gain market share.
Why Cursor?
Astera Labs (ALAB) creates rack-scale connectivity hardware and software for AI servers. The company's revenue growth rates have been impressive, with a 98% year-over-year growth in the first quarter. Its 14% sequential growth rate shows solid momentum, and management's guidance is already pointing to meaningful growth from here. The company's $360 million midpoint of the guidance range for Q2 revenue implies 16.7% sequential growth, but recent history suggests the actual growth rate may be closer to 20%.
The Road Ahead
Cadence Design Systems (CDNS) is off to a slower start than the other AI stocks on this list, but it has a record $8 billion backlog and is expected to see 17% revenue growth for 2026. The company's technology makes it easier to design advanced AI chips that can handle more rigorous workloads than those currently in data centers. This makes it a key checkpoint for AI chips, and the market can support revenue growth and profit margin expansion, making the stock more attractive.
Key points
- Monolithic Power Systems has seen a 40% year-to-date rally and is expected to continue growing as its two hypergrowth business segments gain market share.
- Astera Labs has impressive revenue growth rates, with a 98% year-over-year growth in the first quarter, and management's guidance is pointing to meaningful growth from here.
- Cadence Design Systems has a record $8 billion backlog and is expected to see 17% revenue growth for 2026, making it a key checkpoint for AI chips.
If these companies continue to grow and innovate, they could outperform Nvidia and become leaders in the AI space. Their technology and products are in high demand, and they are well-positioned to take advantage of the growing AI market.
However, there are risks associated with investing in these companies, such as market volatility and competition from other companies. If these risks materialize, the stocks could decline and investors could lose money.
