<div id="readability-page-1">Shares of Nvidia and Palantir Technologies have surged in phenomenal fashion in the past two years or so amid the rapidly growing adoption of artificial intelligence (AI) technology across the globe. While Nvidia stock has jumped an impressive 886% since the beginning of 2023, Palantir has witnessed a bigger surge of more than 2,000% as of this writing. These eye-popping gains are a result of the fast-growing demand for Nvidia's AI hardware and Palantir's software platforms that help companies and governments integrate generative AI into their operations. However, their stunning surges explains why the two stocks are now trading at premium valuations. Nvidia's price-to-earnings ratio stands at 46 right now, while Palantir is way more expensive at 608 times earnings. That's why it would be a good idea to take a closer look at another company that's not only benefiting from the growing demand for AI hardware, software, and other tools but is also trading at an attractive valuation right now. Let's look at the reasons why this alternative to Nvidia and Palantir could turn out to be one of the best AI stocks to buy right now. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjEyMjYvcGVyc29uLW9ubGluZS1zaG9wcGluZy5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjEyMjYvcGVyc29uLW9ubGluZS1zaG9wcGluZy5qcGcmdz03MDA"/>Image source: Getty Images. </div> <h2>This tech giant is gaining from AI adoption in multiple areas</h2> Amazon (AMZN 1.14%) is the fourth-largest company in the world with a market cap of $2.2 trillion. Shares of the company have soared an impressive 148% since the beginning of 2023, outpacing the 87% gains clocked by the Nasdaq Composite index over the same period. Though Amazon's gains aren't as big as those of Nvidia and Palantir, that could change in the long run considering the AI-related markets it could benefit from. Amazon started out as an online marketplace selling books before turning into a full-fledged e-commerce giant with a global presence. However, Amazon didn't stop at just e-commerce. It is now the world's largest provider of public cloud infrastructure services, offers movie and music streaming through its Prime subscription service, and even has a blooming advertising business. Importantly, Amazon is on track to gain from the adoption of AI in all these areas. On its first-quarter 2025 earnings conference call, CEO Andy Jassy said: <blockquote> You can see that in how we're using AI in our fulfillment network, robotics, shopping, Prime Video, and advertising experiences. And you can see that in the building blocks AWS is constructing for external and internal builders to build their own AI solutions. </blockquote> For instance, Amazon has deployed AI-powered shopping assistants on its e-commerce platform to provide personalized suggestions to shoppers in a move that can help boost sales. The company is also using AI and machine learning to analyze customer data to improve product suggestions, while also enabling sellers and brands on its platform to use this technology to optimize their product pages, create marketing and social media content, and research keywords. All this suggests that Amazon is already on track to capitalize on the AI-specific opportunity in e-commerce, which could unlock a $51 billion annual revenue opportunity for the company by 2033, according to third-party estimates. Meanwhile, Amazon is also taking AI's help to improve its fulfillment services so that it can make faster deliveries and is deploying AI-powered robots in its fulfillment centers to improve efficiency and reduce costs. However, Amazon's AI opportunity doesn't end here as the company is looking to capture a bigger share of the cloud AI market with its efficient, in-house custom processors. While Nvidia is the undisputed leader in the AI chip market right now with its powerful graphics cards, major cloud service providers such as Amazon have been developing in-house chips to offer higher performance at lower costs to their customers. For example, Amazon claims that its Trainium2 custom chip is four times more powerful than its predecessor and could be half as expensive while running certain AI models when compared to Nvidia's offerings. Additionally, the company claims that its AI inference-specific Inferentia chip could reduce costs by 40% when compared to graphics cards. With the adoption of custom AI processors expected to grow at an impressive rate of 32% through 2030, there is a good chance that Amazon will continue to witness an increase in AI-related workloads running on its cloud platform. Moreover, the company leads the cloud infrastructure market with an estimated share of 29% at the end of the first quarter. This puts it in a solid position to make the most of the cloud AI market that's expected to generate more than $1.1 trillion in annual revenue by 2033. In all, Amazon is sitting on multiple lucrative opportunities related to AI which could supercharge the company's growth in the long run. <h2>Why Amazon is a better AI stock to buy when compared to Palantir and Nvidia</h2> I've shown that Palantir and Nvidia are trading at expensive multiples right now. Of course, they can back up their expensive valuations with their impressive growth rates, but even Amazon's earnings growth rate is set to improve going forward. Consensus estimates are projecting a 12% jump in Amazon's earnings this year to $6.21 per share. This is expected to be followed by much stronger growth over the next couple of years. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c47f66a22592bacaed81954bd742a3a9.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c47f66a22592bacaed81954bd742a3a9.png"/> AMZN EPS Estimates for Current Fiscal Year data by YCharts It won't be surprising to see Amazon clocking stronger growth rates in the long run as well, considering the size of the end markets that it stands to gain from. The global e-commerce market alone is expected to hit almost $6 trillion in annual revenue by 2029, and cloud AI services could unlock a $1 trillion-plus revenue opportunity. Given that Amazon is now trading at 34 times trailing earnings, it is cheaper than the likes of Palantir and Nvidia. So if you're looking for a reasonably valued AI stock with strong growth potential, consider buying Amazon before it soars higher following its healthy gains of the past two and a half years. </div>

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Shares of Nvidia and Palantir have surged significantly due to the growing demand for AI technology, with Nvidia up 886% and Palantir over 2,000% since early 2023. However, both stocks are trading at high valuations. In contrast, Amazon has gained 148% in the same period and is well-positioned to benefit from AI across its various services, including e-commerce and cloud computing. Amazon's custom AI chips and AI-driven enhancements in its operations suggest it could be a strong alternative investment in the AI sector.

- Nvidia and Palantir Technologies have seen significant stock surges of 886% and over 2,000%, respectively, due to the rising demand for AI technology.  
- In contrast, Amazon's shares have increased by 148% since the start of 2023, positioning it as a strong contender in the AI market with a more attractive valuation at 34 times earnings.  
- Amazon is leveraging AI across its e-commerce, cloud services, and fulfillment operations, suggesting substantial growth potential in the AI sector moving forward.

The Best AI Stock Today Isn't Nvidia or Palantir, and Shares Are Soaring