There is no doubt that Nvidia(NASDAQ:NVDA)’s financial performance over the past year has been something of a standout. Profits have soared as demand for chips for the artificial intelligence (AI) revolution has soared. But as an investor, I think its impressive sales are now priced into its high share price.

At $122.60 per share, Nvidia is trading at a massive price-to-earnings (P/E) ratio of 45.5 in 2024.

Technology stocks typically command high premiums due to their significant growth potential. But the chipmaker appears to be hugely exorbitant compared to almost all of its rivals in the sector.

Other Tech Giants and AI Stocks Microsoft AND Alphabetfor example, trade at P/E ratios of 37.5 and 24, respectively.

This intoxicating valuation leaves little room for bad news. A global economic slowdown, product development issues, or order fulfillment problems are a few risks that, if they become reality, could cause Nvidia’s stock price to decline.

The Beginnings

There is one more problem I see with buying Nvidia shares at current prices.

The chipmaker has been one of the leaders in AI so far. But at this early stage of the race, it’s demanding to say who will ultimately emerge victorious from this recent technological frontier.

Each of the “Magnificent Seven”—which includes Nvidia, Microsoft, and Meta, as well as Amazon, Apple, AlphabetAND Tesla — everyone is spending huge amounts of money on generative AI and machine learning. We might look back and hesitate at Nvidia’s massive valuation in a few years.

Better AI stocks?

One way around this problem might be to buy AI-related stocks rather than the tech companies themselves. This approach will give me a chance to hedge my bets but also avoid the huge premiums these growth companies charge.

With this in mind, I’d like to share some great ways to benefit from the AI ​​revolution.

Power escalate

A significant amount of computing power is required for AI applications, especially those involving deep learning and large-scale data processing. This in turn is leading to a rapid expansion of data centers that house the necessary hardware, and with it a acute escalate in electricity demand.

Ireland’s energy usage figures this week underline just how much power is needed to run these hubs. The country’s data centre electricity consumption has increased by a fifth between 2022 and 2023. The sector now accounts for 21% of all energy in Ireland, more than all urban households in the country combined.

With the rapid development of AI, countries are at sedate risk of not having a net zero emission policy. The result could be an escalate in renewable energy production worldwide.

Greencoat Renewable Energy Sources is one such company that could benefit from the outflow of energy from Ireland. It owns and operates mainly onshore and offshore wind farms in Europe, most of which are located on the Emerald Isle.

Other forceful renewable energy stocks include: Renewable Infrastructure Group — the share that I have in my own portfolio — and FTSE100 wind energy giant SSEIn fact, investors today have dozens of such stocks to choose from.

Unfavorable weather patterns can wreak havoc on energy production and profits at companies like these. But like Nvidia, they also have significant growth potential as the fight against climate change intensifies.