1. NVIDIA Corporation (NASDAQ:NVDA)
Revenue Growth: 122.40%
Number of Hedge Fund Investors In Q2 2024: 179
NVIDIA Corporation (NASDAQ:NVDA) is the world’s largest chip designer in terms of market cap, owing nearly all of its fortunes to the indispensable nature of its products to running AI workloads. The firm’s Grace Hopper and Blackwell chips are industry leaders, and its competitive dominance coupled with a tight supply due to excessive demand also means that NVIDIA Corporation (NASDAQ:NVDA) enjoys substantive pricing power in the market. Another key strength is the firm’s CUDA platform, which enables users to exercise greater control over their products. However, the pricing power might prove to be NVIDIA Corporation (NASDAQ:NVDA)’s Achilles’ Heel, too. If you read our coverage of SNOW, the 5th stock in this list, you’ll know that its shares tanked by 14% after the latest earnings call even though it increased guidance and analyst EPS and revenue estimates. NVIDIA Corporation (NASDAQ:NVDA)’s GPUs might have had a role to play in it, as we subtly alluded. Yet, if alternative products to its GPUs don’t surface, which is likely given NVIDIA Corporation (NASDAQ:NVDA)’s substantial research and development experience, then the stock could do well in the future depending on the state of the AI industry. On the regulatory front, while media reports claim that the DOJ is interested in NVIDIA Corporation (NASDAQ:NVDA) for abusing its market position, the firm has denied receiving any subpoenas. For NVIDIA Corporation (NASDAQ:NVDA), investor expectations for its 2025 and 2026 revenue are also key for its hypothesis, as well as the need to maintain cost control as was evident after its third quarter results that saw shares drop by 6% after a disappointing beat and weaker margins.
Artisan Partners mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter. Here is what the firm said:
“NVIDIA’s year-to-date dollar value increase is $1.8 trillion. That’s equivalent to the 2023 increase in US GDP, which is, of course, representative of the collective economic efforts of about 330 million people. NVIDIA’s market cap is now $3 trillion. So is the GDP of France.
Does this make any sense? We wish that we could definitively say that it doesn’t, given that we don’t own NVIDIA. But the answer is more complicated. The growth in revenue and profits at NVIDIA has been stunning. In the calendar year 2020, its revenue was about $17 billion. Estimates for 2024 are around $120 billion. Operating profit is projected to reach about $80 billion in 2024 versus $4.5 billion in 2020. NVIDIA’s revenue essentially represents the capital spending of a small number of very profitable, very cash-rich technology companies buying up the processors necessary to power artificial intelligence (AI) software programs. It’s an AI landgrab. In order for NVIDIA to sustain these levels of revenue or grow them from here, these AI investments must start to generate an ROI for those splashing out $120 billion a year. And if not generating an ROI in the near term, those companies must at least see the prospect of an ROI, a clear sustainable competitive advantage or a moat of some kind.”
NVDA tops our list of top hedge fund aggressive growth stocks. But our conviction lies in the belief that some 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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