1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
NVIDIA Corp (NVDA) bull Stacy Rasgon, Bernstein Research managing director, was recently asked on CNBC what could be the biggest competitor to Jensen Huang’s company. The analyst said custom AI chips space, or ASICs, can “outgrow” NVIDIA Corp (NASDAQ:NVDA). However, this does not worry the investor for now.
“I actually do think the ultimate shake is probably NVIDIA Corp (NASDAQ:NVDA) GPUs, and then for captive workloads at hyperscalers, it’ll likely be ASICs—they’re all working on their own. I suspect ASICs, frankly, will probably outgrow in the sense that they’re coming from a much smaller base. But you can do the math today. If I was, you know, it’s a little bit of monkey math, but I bet ASICs relative to GPUs are probably low double digits—10, 11, 12% of the spend today. Could that number be 20% of a much bigger pie in 5 years? Yeah, I think it could.
But my sense is that’s the likely competition now. Does it worry me? It doesn’t really worry me at this point because I don’t think we’re on the saturated part of the S curve. Things are still growing. So right now, I think the question to ask is, is it a big market or is it not? If it’s a big opportunity, I think there’s room for everybody. If it’s not a big opportunity, then everybody’s in trouble. So I think that’s the question that you want to have confidence in one way or the other. I’ll worry about competition later—I don’t think it’s the time to worry about it now.”
Manole Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
While we acknowledge the potential of NVIDIA Corp (NASDAQ:NVDA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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