Nvidia (NASDAQ: NVDA) has emerged as a dominant force in the booming artificial intelligence (AI) sector over the past two-and-a-half years. The companys graphics processing units (GPUs) have become the backbone of major data center projects, particularly among hyperscale cloud providers who are investing astronomical sumsinto the tens of billions of dollarsin AI technologies. This surge in demand has not only led to substantial revenue growth for Nvidia but has also resulted in even more impressive earnings increases over the past two years.

As a result of its extraordinary performance, Nvidia has provided its investors with remarkable returns. In 2023 alone, Nvidias stock price skyrocketed by an impressive 239%, with an additional 171% increase in 2024. This remarkable appreciation in stock price briefly propelled the company to the top of the rankings for the most valuable companies globally. However, following a recent sell-off in the stock market, Nvidias shares are now approximately 25% lower than their all-time high, which was reached in January.

With many investors eyeing Nvidia as a potential buying opportunity at these lower prices, its essential to note that two other companies in the artificial intelligence space are poised to outperform Nvidia over the long term. These companies possess competitive advantages that could provide them with substantial staying power, regardless of how the narrative around AI unfolds.

1. Meta Platforms

Meta Platforms (NASDAQ: META) stands out as potentially the largest long-term beneficiary of advancements in generative AI among major corporations globally. The company is heavily investing in this technology, with management announcing that its capital expenditures could reach as high as $65 billion this year. This investment is focused on leveraging the potential of generative AI through the construction of new data centers. Although this budget is not as vast as the expenditures of the three leading cloud computing platforms, it is important to note that Meta does not lease its servers to third parties; instead, it utilizes all these resources for its own operational needs.

The scale of investment indicates that Meta recognizes a significant opportunity for growth within its business model. Already, the company is witnessing favorable results from its AI initiatives. For instance, Meta has effectively utilized insights gained from developing large language models to enhance its recommendation applications, broadening their functionality to provide general recommendations across various types of content. This has led to greater user engagement and increased time spent on its platforms.

In addition, Meta is experiencing robust adoption of its early ad creative AI tool, Advantage+ Creative, which has already attracted 4 million advertisers. The expansion of generative AI capabilities could potentially open new avenues for small businesses to purchase advertising space on Meta's platforms with minimal experience or overhead costs. In the long run, Meta could introduce an AI assistant that simplifies the ad campaign development process significantly. As CEO Mark Zuckerberg mentioned during Meta's second-quarter earnings call last year, advertisers will eventually only need to specify a business objective and budget, after which Meta will handle the rest. This shift could unlock a vast number of new advertisers for Meta while continuously enhancing the effectiveness of its advertisements, which in turn would lead to higher average ad prices.