Should You Forget Nvidia and Buy This Artificial Intelligence (AI) Stock Instead?

Is Nvidia (NASDAQ: NVDA) in trouble? It's a question many investors have been asking after shares tumbled more than 20% from recent highs.

Today, let's examine what has happened with Nvidia and whether another stock might be the smart choice for AI investors in 2025.

A good rule of thumb for investing is to always have a thesis -- a rationale for why you believe a stock will deliver value over the long term.

For Nvidia, the most widely accepted thesis explaining the rapid rise of its stock is that the company will be the engine behind the AI boom. The AI revolution will require millions of GPUs, and Nvidia will be selling many of them, generating hundreds of billions in revenue and profits.

It's a solid thesis, and one that I share. However, the emergence DeepSeek, which was developed in China, seems to undercut that thesis. Specifically, its designers claim that it took only a fraction of the computing power to train their model, and roughly $5.6 million.

If those claims are accurate, it would appear that American companies are spending far more than necessary on Nvidia GPUs, thus the thesis that its stock would come crashing down.

First of all, I do not believe DeepSeek undermines the investment thesis for Nvidia.

Part of the reason is that I view any news coming out of China -- particularly as it relates to AI -- with a healthy amount of skepticism. China is America's great geopolitical rival, and propaganda and misinformation are used by great powers to further their ends.

Moreover, since the U.S. government placed export restrictions on certain Nvidia GPUs, there are various parties who may want to obscure which GPUs were used to train the DeepSeek model.

What's more, an analysis from the research company SemiAnalysis noted that the cost to train the DeepSeek model was likely $500 million, almost 100 times more than what its designers reported.

Therefore, in my view, there's no good reason to forget Nvidia stock right now. Nevertheless, some investors may want to trim back their holdings or simply move on. And in that case, my suggestion would be to check out Palantir Technologies (NASDAQ: PLTR).

For those who follow AI stocks closely, Palantir is one of the big names. However, for the average investor, it is far from an iconic company. Yet it's already a corporate giant.

As of this writing, Palantir's market cap is $241 billion. That makes it more valuable than McDonald's, AT&T, and American Express, to name just three legendary U.S. companies. Palantir is now the 32nd-largest American company overall, and it has all happened in a flash. A year ago, it wasn't even part of the S&P 500.

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