It's hard to beat the growth potential of cryptocurrencies. Ark Invest founder Cathie Wood, for instance, believes that Bitcoin has more than 2,000% in long-term upside. But some stocks have just as much room for growth. If you're looking for maximum upside, these two stocks are for you.

No list of stocks with massive upside would be complete without a mention of Nvidia (NASDAQ: NVDA). Few investments have ever risen as quickly as the chipmaker. A $1,000 investment made five years ago would already be worth more than $26,000. Yet Wall Street analysts still believe there's more than 30% in gains to come in the next 12 months. Given that Nvidia's market cap is now around $2.6 trillion, it can be hard to picture how it would deliver further huge gains in the near term. But there are several reasons for optimism.

The same catalyst that has sent Nvidia stock soaring will not only be in place for the next several decades, but should strengthen significantly over time. In many ways, the story of Nvidia is still very much in its early innings. That's because the company's biggest source of growth is the rapid rise of AI technologies that rely on its high-end graphics processing units (GPUs) to function.

Gone are the days when Nvidia's financial situation was dictated by gaming and small use cases. Today, there's an arms race for the components that enable AI research and innovation -- and Nvidia's got the goods everyone wants.

According to estimates from BIS Research, the AI industry's spending on semiconductors totaled around $15 billion last year. But spending has already picked up dramatically in 2024, providing a tailwind that has more than doubled Nvidia's revenues over the past 12 months.

BIS Research expects that spending to increase by nearly 32% over the next several years, with plenty more growth expected beyond that. Nvidia has an estimated 90% market share in AI GPUs, positioning it to capture the lion's share of this long-term growth trend. Nvidia should also directly benefit from the rise of crypto, as it specifically designs many of its GPUs for cryptocurrency mining.

What's the one category that could outpace the entire value of the crypto industry? AI. And in that arena, Nvidia is the stock to bet on.

Nvidia's market cap will likely prevent it from rising by another 1,000% anytime soon. But there's one fintech stock that has the potential to do so: Nu Holdings (NYSE: NU).

Most investors have never heard of Nu, even though it has a market cap of nearly $70 billion. That's because the bank operates exclusively in Latin America, and the only way to access its services is via smartphones. Its strategy upended Latin America's banking industry a decade ago. Instead of building and operating costly physical branches, Nu offered its services directly to consumers online. This lowered costs, allowing it to compete aggressively on price and offerings.

Moreover, it allows Nu to innovate faster than the competition. When the company launched its Nu Cripto platform -- a service that allows people to buy, sell, and transact in various cryptocurrencies -- it attained 1 million users in a matter of months. Innovations like this help explain how Nu has gone from essentially zero customers a decade ago to more than 100 million today.

But Nu is far from done growing. There are more than 650 million people in Latin America, and Nu has proven its ability to penetrate markets quickly. More than half of all Brazilian adults are now Nu customers, and Nu has been replicating its playbook in new markets like Mexico and Colombia.

Analysts expect sales growth to be around 44% this year, followed by another 30% in 2025, and there's a good chance that Nu will maintain double-digit percentage growth rates through the next decade and beyond. This is a long-term story, but Nu has the potential to match or exceed the performance of most major cryptocurrencies.

Why AMD Is Falling Behind

Advanced Micro Devices (NASDAQ: AMD) has a potent role in tech, supplying its chips to companies across the industry. Its hardware powers everything, from video game consoles to cloud platforms, consumer-built personal computers, laptops, and AI models. As a result, AMD formed lucrative partnerships with companies like Microsoft (NASDAQ: MSFT), Sony, and Meta Platforms.

AMD's success over the years saw its revenue and operating income increase by 224% and 45%, relatively, since 2019. Meanwhile, its stock climbed by 384% in the last five years. The company boasts a long growth history and has a solid outlook as it expands into high-growth sectors like AI.

However, a rally over the last year and a business that has only recently begun seeing returns on its significant investment in AI means its stock isn't exactly a bargain.

When you consider the price-to-earnings (P/E) ratios of some of the most prominent names in AI, including three chipmakers and two leading cloud providers, AMD has the highest P/E among these companies, indicating its stock offers the least value.

AMD's P/E might prove inconsequential over the long term, as the company's stock will likely continue rising as the tech industry expands. However, for anyone looking for bargains, it might be best to avoid AMD for now.

Nvidia: The AI Chip Leader

Nvidia (NASDAQ: NVDA) isn't a screaming value with a P/E of 74. However, its stock remains a compelling option with a lower P/E than its rivals, AMD and Intel, and a majority market share in AI.

Chip stocks are one of the best ways to invest in tech, with their hardware crucial to the industry's development. Advances in chip technology bolstered countless markets over the last decade, encouraging innovation in cloud computing, virtual/augmented reality, data centers, consumer tech, gaming, and more. As a result, chip demand has skyrocketed in recent years.

As leading chipmakers, Nvidia and AMD enjoyed solid gains over the last half-decade thanks to increased chip sales. While both companies have delivered stellar growth, it's hard to ignore how much higher Nvidia's earnings and share price have risen compared to AMD's. Nvidia's has also proven to be more reliable, with its earnings and stock steadily trending up, while AMD experienced more volatility.

Nvidia's success is mainly due to its dominance in graphics processing units (GPUs), which are high-performance chips capable of completing multiple tasks simultaneously. GPUs are critical for training AI models and powering data centers. Consequently, the AI chip market is projected to hit $71 billion this year, with Nvidia's hardware accounting for an estimated 90% of the industry.

Nvidia has a solid role in tech, and its business will likely continue expanding as demand for its chips rises. This year, the company reached $39 billion in free cash flow, significantly outperforming AMD's just over $1 billion. Nvidia has the financial resources to continue investing in AI and maintain its lead. Meanwhile, its better-valued stock makes it a no-brainer right now.

Microsoft: A Software Powerhouse

When investing in tech, it's a good idea to diversify your holdings in software and hardware. While Nvidia is an excellent option for securing a position in the hardware side of the industry, Microsoft has years of experience dominating software. Home-grown products like Windows, Office, Xbox, Azure, and LinkedIn have helped the company build a massive user base and a powerful role in tech.

Since 2019, Microsoft delivered less earnings and share price growth than AMD. However, like Nvidia, Microsoft has been far more consistent, making it a less risky investment. As a result, the company's stock is potentially a better long-term hold.

Microsoft's reliability is mainly due to its thoroughly diverse business model. The company has leading positions in multiple tech areas, from productivity software to operating systems, video games, social media, cloud computing, and digital advertising.

Moreover, Microsoft is never still for long, consistently reinvesting in its business and seeking out new growth markets. The company's commitment to innovation saw it become an early investor in AI, sinking $1 billion into ChatGPT developer OpenAI in 2019. That figure has since risen to about $13 billion, with the powerful partnership giving Microsoft access to some of the most advanced AI software.

Meanwhile, Microsoft has already begun seeing earnings boosts from AI, thanks to recently launched AI solutions on its cloud platform, Azure, and paid-for features in Office. In fiscal 2024 (ending in June), Microsoft's revenue increased by 16% year over year, while operating income soared 24%. The period benefited from a 20% rise in cloud sales and a 12% increase in its productivity and business processes segment, with both divisions expanding their AI offerings.

Microsoft's diverse business provides it with countless ways to monetize its AI venture. Alongside $74 billion in free cash flow and a better-valued stock, it's worth picking up Microsoft over AMD this August.

The Bottom Line: AI Is The Future

The Motley Fool's Stock Advisor team has identified what they believe are the 10 best stocks for investors to buy now, and neither Nvidia nor Microsoft made the cut. This list is based on the analysts' thorough research and careful consideration of each company's potential for growth, profitability, and long-term value. The 10 stocks on this list, while not specifically named in the article, are poised to deliver significant returns in the coming years.

The Stock Advisor service has a proven track record of success, having more than quadrupled the return of S&P 500 since 2002. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $731,449! It is worth considering these stocks to build a diversified portfolio with the potential for strong long-term returns. While Nvidia and Microsoft may not have made the cut this time, their strong positions in AI and their overall potential for growth make them compelling investments to consider.