Nvidia (NVDA 1.92%) has been one of the best long-term investments of all time. Since 1999, shares have increased in value by more than 285,000%, pushing the company's market capitalization into the trillions of dollars. The cause of Nvidia's soaring valuation has been the rise of artificial intelligence (AI).

But Nvidia isn't the only company exposed to the massive tailwind that is AI spending. Long term, there's another chipmaker that could end up giving Nvidia a run for its money. And unlike Nvidia's stock, this relatively small competitor isn't priced for perfection, meaning patient investors could benefit from both rapid long-term growth rates and a discounted valuation.

AI spending will be bigger than many expect

Nearly everyone is well aware of the leap in AI innovation that has occurred in recent years. The ChatGPT website receives several billion visitors every month, and the company's COO recently revealed that it has more than 400 million active monthly users, up from around 300 million just a few months ago. Amazingly, this growth occurred even as ChatGPT faced heavy competition from other AI models like DeepSeek, which itself has gained hundreds of millions of new users.

But all of this growth is still on the end-user side. Right now, there's also a huge uptake in AI adoption among businesses, although adoption rates overall for businesses in the U.S. remain under 10%. That provides a huge runway for long-term growth. And just like in the internet's early days, the ultimate power and pervasiveness of this paradigm-shifting technology will likely be hard to overestimate.

Consider the latest research from global consultancy McKinsey & Co. Generative AI alone, the firm believes, could produce $2.6 trillion to $4.4 trillion in economic impact from business adoption alone. By 2040, it believes revenue from AI software and services will reach $1.5 to $4.6 trillion, up from just $85 billion in 2022. Put simply, the pace and scale of the AI revolution will likely be even greater than most predict.

That's great news for Nvidia. Its graphics processing units (GPUs) -- critical components that make it possible for AI services and applications to exist -- are considered the best in the business, granting the company a market share somewhere between 70% and 95% for AI GPUs. But as previous chip wars have demonstrated, market shares vary over long stretches of time, and Nvidia's dominant position may not last forever. But even if it does, there should be plenty of market to sell into.

All that gives the company below a bright future despite a dramatically smaller market cap versus Nvidia today.

One reason Advanced Micro Devices could overtake Nvidia

It will be a very difficult feat, but if I had to pick one company to match Nvidia's size within a decade from now it would be Advanced Micro Devices (NASDAQ: AMD). The company is at a steep disadvantage right now in terms of technological capabilities and vendor lock-in. But it is making all the right investments to compete over the long term.

NVDA PS Ratio data by YCharts.

Right now, AMD's market value is a small fraction of Nvidia's. And its valuation, at least in terms of multiples like the price-to-sales ratio, is considerably smaller as well. But the company has managed to continue upping its research and development budget despite these headwinds. That budget is around 25% of its revenue base right now. Nvidia's, while larger on an absolute basis, totals just 10% of its sales base.

AMD's continued investments are allowing it to launch next-gen graphics cards for gaming like its Radeon RX 9000 series cards. But its also allowing it to slowly catch up with Nvidia for AI GPUs. The launch of its MI325X chips will allow it to compete more directly with Nvidia's Blackwell chips, and management recently noted that it will be accelerating its product schedule to release new chips on an annual schedule to better compete and capitalize on the boom in demand for AI chips.

Will AMD overtake Nvidia over the next seven years? Nvidia's own explosive rise has shown that it's possible. But it will be a long, difficult road. Fortunately, the company continues to reinvest in new products, efforts that should be rewarded long term given continually rising end-market demand. At a fraction of Nvidia's valuation, AMD is a great speculative bet for patient growth investors.