6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is one of the best technology stocks to buy for the long term. It was held by 179 hedge funds in Q2 2024, with total stakes worth $53.67 billion. Citadel Investment Group is the largest shareholder of the company with a position worth $18.35 billion.
It is renowned for designing and manufacturing Graphics Processing Units (GPUs) and hardware for powering artificial intelligence applications. The technologies manufactured by the company are used in gaming, automotive, and data centers.
GPUs are the specialty of NVIDIA Corporation (NASDAQ:NVDA) and give the company a strategic edge over its competitors due to its variety of applications. Initially, GPUs were mainly used for powering gaming graphics, however, their use case has gone beyond that. Today, NVIDIA Corporation’s (NASDAQ:NVDA) GPUs are being used to train AI models and have contributed greatly to its revenue.
During the fiscal first quarter of 2025, the explosive growth of AI resulted in the company’s revenue surging 262% year-over-year to reach $26 billion, well above the guidance of $24 billion. Revenue growth was boosted by exceptional Data Center performance, which grew 427% year-over-year to reach $22.6 billion.
Gross Margin was also up 13.8 base points year-over-year indicating robust profitability. Moreover, as a result, NVIDIA Corporation (NASDAQ:NVDA) posted an impressive yearly net income gain of 628% during the quarter.
Looking ahead, management remains confident in continuing the growth trend and expects the next quarter’s revenue to be $28 billion and gross margins at 74.8%. If you were to look at its past 5-year performance, you would find NVDA to be no less than exceptional. The company has grown its top line by 49%, and its bottom line by 67%, while maintaining strong liquidity by increasing its levered free cash flow by 84%.
It is trading at a premium to its sector but its earnings are expected to grow by 92% during the year to reach $0.71. 61 analysts have a strong Buy rating on NVDA, with their 12-month median price target of $142.5 presenting an upside of 15% from the current level.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
