1. NVIDIA Corp Inc (NASDAQ:NVDA)
YTD Price Gain: 156%
Nvidia Corp (NASDAQ:NVDA) shares have an RSI of over 70, indicating the stock is overbought. It’s the second-biggest holding of the QQQ ETF, which has entered the overbought territory according to BTIG.
However, many believe NVDA has more upside potential.
UBS believes Nvidia Corp (NASDAQ:NVDA) is well-positioned to benefit from the $331 billion market opportunity in the AI Enabling layer, thanks to its GPUs. In the Cloud segment of the Enabling layer, UBS thinks Nvidia Corp’s (NASDAQ:NVDA) DGX offering makes the company a promising player. Nvidia Corp (NASDAQ:NVDA) DGX Cloud is a supercomputing service that gives enterprises access to software and infrastructure required to train advanced models for generative AI. It’s a combination of servers and workstations for optimizing deep learning applications through the use of general-purpose computing on graphics processing units (GPGPU).
On the Intelligence and Application layer of the AI value chain, UBS sees no notable catalyst for Nvidia Corp (NASDAQ:NVDA).
NVIDIA Corp’s (NASDAQ:NVDA) latest product announcements and its plans revealed at the Computex 2024 show that NVIDIA Corp (NASDAQ:NVDA) has much more in its arsenal to power its growth engine. Analysts like NVIDIA Corp’s (NASDAQ:NVDA) shift to new AI architecture known as Rubin (R100) and think its powerful H100 and Blackwell chips easily beat competitors.
Meridian Hedged Equity Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading designer of graphics processing units (GPUs) for the gaming and professional markets, as well as system-on-a-chip units for the mobile computing and automotive markets. The company has experienced strong performance recently due to booming demand for its data center products, particularly those related to artificial intelligence. A major driver of Nvidia’s recent success has been the growing adoption of its GPU accelerators for AI training and inference across various end markets. The company’s GPUs have become an industry standard for training large language models (LLMs), and its networking solutions, such as NVLink and InfiniBand, are critical to maximizing the performance of AI systems. Nvidia’s latest Blackwell GPU platform is expected to further extend its lead in the AI accelerator market, with significant performance and total cost of ownership benefits over its predecessors. As the AI market continues to expand with growing adoption across enterprises and sovereign nations, we expect Nvidia to maintain its dominance and experience sustained growth in its data center business. Beyond data centers, Nvidia has also benefited from strong demand in its gaming business, which has recovered after a period of inventory digestion in 2022. The company’s gaming GPUs have been well-received, and its focus on the high-end market has supported growth in average selling prices. Looking ahead, we expect the gaming market to remain healthy with ongoing growth potential. Nvidia also sees opportunities to diversify its business and foray into new markets, such as automotive and robotics. We continued to hold our position in Nvidia.”
While we acknowledge the potential of NVIDIA Corporation (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.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.
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