Nvidia (NASDAQ: NVDA) stock is rallying hard again, and at $138, sits just off a record high. This gives the heavyweight AI chipmaker a market cap of $3.39trn. For context, that’s more than the GDP of the UK!

The tech share has now surged 178% in 2024, making it the second-best performer in the S&P 500. Yes, that’s right, there’s one stock that’s done even better! That’s Vistra, an energy company whose share price has rocketed 243% year to date due to a surge in AI-fuelled power demand. But that’s not the one I’d buy.

A ‘Nvidious’ position

First, let me look at Nvidia. CEO Jensen Huang recently said that demand for its new Blackwell AI chips is “insane“. Reports say that production of these is already fully booked out a year in advance. That obviously sounds positive for pricing power and future earnings growth.

However, there are risks here. As Morgan Stanley analysts noted in July: “[A] threat will come if any of Nvidia’s four largest customers…succeed in their efforts to design a better priced alternative to the H100 or its next generation follow-up chips Blackwell (2025) and Rubin (2026). Economics undergraduate principles spring to mind: abnormal profits first attract abnormal speculation and then abnormal competition.”

The firm’s four largest customers are Microsoft, Amazon, Alphabet and Meta Platforms, and they currently comprise over 40% of its revenues. So there’s high customer concentration, and I wouldn’t rule out one (or more) of those tech giants eventually designing cheaper, cutting-edge AI chips.

Plus, the semiconductor industry is still inherently cyclical, meaning demand can quickly drop off. We see evidence of this with 50%-90% drops in Nvidia’s share price in 2002, 2008, 2018 and 2022.

A broader tech alternative

Nevertheless, AI does look like a true technological revolution to me, not just a passing fad. So if I wanted to increase my exposure to it and Nvidia, I’d consider Allianz Technology Trust (LSE: ATT).

As the name suggests, this FTSE 250 trust is focused on technology. It’s managed near Silicon Valley, the enduring epicentre of tech innovation.

Nvidia is the largest holding today, with a meaty 10.8% weighting. This means I’d get decent exposure to the chipmaker, while also potentially minimising losses if the stock dropped like a stone.

Buying the trust’s shares would also give me instant diversification due to the other tech firms in the portfolio (around 40). These include Apple, Broadcom, and Microsoft, as well as a fair smattering of up-and-coming stocks.

One lesser-known example is Monolithic Power Systems, a company that’s capitalising on the electrification of the economy, driven by trends like electric vehicles and the boom in AI and data centres. The stock is up 95% in the past year.

As for Allianz Technology Trust, its share price is up an impressive 153% in five years (similar to the Nasdaq-100 index). That’s nearly double the return of the FTSE 100‘s Scottish Mortgage Investment Trust.

Naturally, the shares would struggle if the tech sector nosedived. Also, the US election could cause some volatility, as would a recession in the world’s largest economy.

But with the trust currently trading at a 12% discount to its net asset value and were I seeking Nvidia exposure, I’d consider it as an alternative to investing in Nvidia directly.