3 AI stocks outpacing Nvidia's 11% gain in 2024

The article argues that three growth stocks exposed to AI infrastructure buildout have outpaced Nvidia's 11% year-to-date return and are positioned to extend that outperformance into 2027.

Monolithic Power Systems (NASDAQ: MPWR) has rallied more than 40% year to date, driven by surging demand from AI data centers. The company produces power management systems that enable data centers to maintain continuous uptime without overloading AI chips, working in concert with liquid-cooling solutions to keep hardware cool. In its first quarter, the company reported 26.1% year-over-year revenue growth and slightly faster net income growth. Two business segments are driving the bulk of this expansion: enterprise data, which accounts for about one-third of total sales and nearly doubled year over year, addressing power management and integrated solutions for AI chips and servers; and communications, which focuses on telecom infrastructure, satellite systems, and networking equipment, grew 55.5% year over year (and 33.1% sequentially) thanks to AI tailwinds and represents 14% of total sales. The article suggests that as these two hypergrowth segments gain market share, the company should experience accelerating revenue growth and outperform Nvidia again in 2027.

Astera Labs (NASDAQ: ALAB) creates rack-scale connectivity hardware and software for AI servers, allowing hyperscalers to achieve faster data transmission between AI chips and server clusters. The company's Q1 results showed sales nearly doubling year over year and 14% sequential growth. The article notes that double-digit percentage sequential revenue growth rates have become more common in the AI hardware space and cites Micron as a historical example where such momentum preceded a sharp share price increase.

Nvidia's 11% year-to-date return, while representing a climb to the world's most valuable publicly traded company, has lagged behind several smaller AI infrastructure suppliers. The article identifies a pattern: as hyperscalers (large cloud providers) invest heavily in AI infrastructure, demand flows not just to the AI chips themselves but to the enabling technologies—power management, cooling, and connectivity—that make those chips functional at scale. Monolithic Power Systems' enterprise data segment (which serves AI chips and servers) nearly doubling year over year and its communications segment jumping 55.5% suggest that this supporting layer of the AI stack is experiencing compressed growth cycles. The article draws a historical parallel to Micron, noting that double-digit sequential revenue growth in AI hardware preceded that company's sharp stock run, implying that the same momentum may be building for these infrastructure plays in 2027.

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