Nvidia (NASDAQ: NVDA) remains the clear leader in artificial intelligence (AI) chips, with record demand driving its valuation to historic highs. All eyes are now on the company’s August 27 earnings, where Wall Street expects another blockbuster report that could push the stock even higher.
After topping a $4 trillion valuation, many investors fear Nvidia’s rally may be overextended. While growth prospects remain strong, its lofty valuation makes new entries harder to justify.
For those wary of chasing the stock, two smaller semiconductor players offer compelling alternatives.
Ambarella (NASDAQ: AMBA)
Ambarella (NASDAQ: AMBA) has carved out a strong niche in edge artificial intelligence, specializing in system-on-chip solutions that combine imaging and computer vision for applications in autonomous vehicles, robotics, and security systems.
Its CVflow technology enables devices to run AI workloads directly on-device, reducing latency and energy use, key advantages as demand for edge computing accelerates.
As of press time, AMBA stock was trading at $70.37, up nearly 10% over the past month, although still down 4.6% year-to-date.
The company’s latest quarter highlights this momentum. Ambarella reported revenue of $85.9 million, a 2.2% sequential increase that beat expectations, with AI now making up the majority of sales. Management guided for $90 million in revenue next quarter, a projected 4.8% rise, and raised its full-year growth outlook to around 22%.
On the other hand, Wall Street remains bullish with Stifel recently maintaining a ‘Buy’ rating with an $80 price target, citing strong design wins and healthy demand across both the automotive and IoT markets.
Ceva (NASDAQ: CEVA)
Ceva (NASDAQ: CEVA) may not produce chips itself, but its licensing model in digital signal processing and AI processors gives it exposure to some of the fastest-growing segments in semiconductors.
The company licenses technologies such as Wi-Fi 6, cellular IoT, and neural processing units (NPUs), enabling it to scale through royalties while avoiding the high costs associated with fabrication.
In the second quarter of 2025, CEVA exceeded earnings expectations with EPS of $0.07, surpassing the $0.06 forecast. Revenue slipped 9.5% year-over-year to $25.7 million, but gross margins held strong at 87%. Record shipments of IoT and Wi-Fi 6 devices boosted royalty income, while four new NPU licensing deals highlighted its expanding role in the edge AI market.
Still, the stock has struggled in 2025. As of press time, CEVA shares were down 1.2% at $22, extending a nearly 30% year-to-date decline.
Even so, analysts remain optimistic. In this line, Rosenblatt Securities reaffirmed a ‘Buy’ rating with a $40 price target, pointing to the company’s solid fundamentals and growing licensing base.
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