Bill Nygren: Nvidia isn't the best AI stock, these two companies have more potential

There is a huge interest in artificial intelligence (AI) from hardware manufacturers like Nvidia. However, experienced value investor Bill Nygren believes that companies that use AI to improve their business models stand to benefit the most in the long run. Nygren highlights two companies that are effectively using AI in their operations.

Bill Nygren and his vision for AI

The history of technological revolutions shows us that hardware manufacturers, such as those who made personal computers in the past, got the early attention, but the ones who were successful in the long run were those who were able to use new technologies to enhance their business models. Nygren believes that this trend will also be seen in the field of AI, where those who implement this technology into their business should be the ones to gain the most benefits.

Capital One Financial $COF

Capital One is one of the largest financial services providers in the U.S. and specializes in credit cards, consumer banking and auto loans. The company uses AI in fraud detection, credit scoring, and automated customer service, allowing it to strengthen its position in the competitive financial sector. Shares of Capital One have fluctuated between $128.23 and $210.67 over the past 52 weeks, and the company has posted steady performance, with shares up 10% YTD.

With projected earnings per share (EPS) of $15.65 in 2025 and further growth of 16.10% in 2026, analysts agree that Capital One has solid growth prospects. The target price for the stock is around $220.56, suggesting room for upside.

Charter Communications $CHTR

Charter Communications, known by its Spectrum brand, is a major telecommunications and broadband company based in Connecticut. Using AI to optimize operational efficiency and customer service, Charter is at the forefront of the telecom industry's focus on automation and improving the user experience. Charter's shares have ranged from $236.08 to $415.27, rising 8% YTD.

Charter has a P/E ratio of 9.41x, which is lower than the industry average, and a price-to-market ratio of 0.93x suggests the stock could be undervalued. Earnings per share are expected to grow 9.12% in 2025, indicating stable growth prospects. Charter's stock price target averages $411.09, indicating approximately 10% upside potential.

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Source: Yahoo Finance