1. NVIDIA Corporation (NASDAQ:NVDA)
D.E. Shaw & Co’s Stake Value: $2.09 Billion
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is one of the best stocks to buy, according to billionaire D.E. Shaw, as a leading supplier of much sought-after graphics processing units. The company has affirmed its status as the most valuable company owing to strong demand for its GPUs used in powering and developing AI infrastructure.
NVIDIA Corporation (NASDAQ:NVDA) is up by more than 189% for the year. The rally comes on the company affirming its status as the leader of the artificial intelligence revolution. Likewise, it has delivered blockbuster financial results that affirm underlying growth. It logged a 94% increase in revenue in Q3 on November 21, 2024, to $35.1 billion. Likewise, its net income doubled to $20 billion. The robust growth comes from competitors struggling to catch up to the company’s graphics processing units (GPUs), which have been used in data centres for years.
It is estimated that between 70% and 95% of AI data centres use NVIDIA Corporation’s (NASDAQ:NVDA) GPUs. Well-funded AI start-ups like OpenAI and xAI, as well as large hyperscale companies with massive data centres like Microsoft, Alphabet, Amazon, and Meta Platforms, are driving the demand for Nvidia’s GPUs. There is currently “insane” demand for Nvidia’s newest-generation Blackwell GPUs as a result of these companies competing to develop the best and most potent AI models.
By introducing new AI hardware, such as the Blackwell chips, management is making a concerted effort to strengthen its lead. Growth is expected to continue, as the majority of NVIDIA Corporation’s (NASDAQ:NVDA) biggest clients have stated that they intend to increase their expenditures on data center expansion in order to support their AI aspirations.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
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.
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