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Excitement over artificial intelligence (AI) has created many millionaires this year, as chip stocks like Nvidia (NVDA -0.33%) have skyrocketed 230% since Jan. 1. The company has significantly profited from increased demand for graphics processing units (GPUs), which are crucial for training AI models.

Nvidia's business exploded this year. However, it is worth looking at companies at slightly earlier stages in their AI journeys, as they could have more room to run in the coming years.

Intel (INTC 1.95%) is an exciting option, with years of experience in the chip market. The company also plans to launch a new AI GPU in 2024.

So, forget Nvidia. Here is why Intel is a magnificent AI stock to buy instead.

It hasn't been easy to be an investor in Intel over the last few years. The company was responsible for more than 80% of the central processing unit (CPU) market for at least a decade, and was the primary chip supplier for Apple's MacBook lineup for years. However, Intel's dominance saw it grow complacent, leaving it vulnerable to more innovative competitors.

As a result, Advanced Micro Devices started gradually eating away at Intel's CPU market share in 2017, with Intel's share now down to 69%. Then, in 2020, Apple cut ties with Intel in favor of far more powerful in-house hardware. Intel's stock subsequently dipped 4% over the last three years. Meanwhile, annual revenue tumbled 19%, with operating income down 90%.

However, the fall from grace has seemingly lit a fire under Intel again. According to Mercury Research, from the second quarter of 2022 to Q2 2023, Intel regained 3% of its CPU market share from AMD.

Moreover, Intel has pivoted its business to the $137 billion AI market, with plans to challenge Nvidia's dominance in 2024. The sector is projected to expand at a compound annual growth rate of 37% through 2030, which would see it rise more than $1 trillion before the end of the decade.

As a result, even if Intel can't dethrone Nvidia, projections show there will be plenty of opportunities for Intel to snap up market share and profit significantly from the industry's development.

Earlier this month, Intel unveiled Gaudi3, a generative AI chip meant to compete directly with Nvidia's H100. The GPU will begin shipping in 2024 alongside Core Ultra and Xeon chips that include neural processing units, making them capable of running AI programs faster.

Shares in Intel have soared more than 70% in 2023, almost entirely thanks to its prospects in AI. While that is nowhere near Nvidia's stock growth in the period, it could mean Intel has more to offer new investors in the coming years.

Data by YCharts

The charts show Intel's earnings could hit nearly $3 per share over the next two fiscal years, while Nvidia's are expected to reach $24 per share. Therefore, on the surface, Nvidia might look like a no-brainer. However, multiplying these figures by the companies' forward price-to-earnings ratios yields a stock price of $130 for Intel and $939 for Nvidia.

Looking at their current positions, the figures project Intel's stock will rise 184% and Nvidia's 95% within the next two fiscal years. While both boast impressive growth, Intel is forecast to deliver far more significant gains.

The figures align with Nvidia's meteoric rise this year compared to Intel's more gradual expansion. Intel is just getting started in AI and could be in for a lucrative 2024. So if you're looking for an AI stock to add before the new year, Intel is a screaming buy right now instead of Nvidia.

Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

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Forget Nvidia: Buy This Magnificent Artificial Intelligence (AI) Stock Instead - The Motley Fool