6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
When it comes to artificial intelligence, NVIDIA Corporation (NASDAQ:NVDA) stays ahead of the pack owing to the strong demand for its graphic processing units used to power various AI models. The artificial intelligence frenzy has powered the company to become the most valuable company in the world on the back of record-breaking revenues and earnings.
Revenue in the second quarter was up 122% to $30 billion as net income more than doubled to $16.6 billion. The company expects Q3 revenue to increase 80% to $32.5 billion. Given the rate at which the company’s earnings and revenues are growing while the artificial intelligence frenzy is all but starting, underlines why it is one of the most promising growth stocks according to hedge funds.
While NVIDIA Corporation (NASDAQ:NVDA) has gained significantly over the past year, causing the stock to trade at a premium with a price-to-earnings multiple of 34, there is still room for more gains. The stock could hit another all-time high due to the ‘insane’ demand for the company’s new Blackwell chip.
CEO Jensen Huang said “It [Blackwell] gives us an opportunity to triple down, to really drive the innovation cycle so that we can increase capabilities, increase our throughput, decrease our costs, and decrease our energy consumption.”
Given that the company has delivered five straight quarters of triple-digit percentage revenue growth, the trend is not expected to change. The Federal Reserve cutting interest rates by 50 basis points and hinting at further cuts should make it easy for companies investing in AI, fueling additional demand for Nvidia chips.
The market experienced a strong tailwind for AI chips, and the expansion of data centers translates to NVIDIA Corporation (NASDAQ:NVDA)’s booming business. The company’s own guidance calls for 79% in revenue growth in the current quarter, affirming the tremendous opportunities in the market.
With NVIDIA Corporation (NASDAQ:NVDA)’s board approving an additional $50 billion in share buybacks last summer, there’s a strong belief that the stock is worth considering. It is one of the stocks rated as a buy with an average price target of $152.44, implying a 14.60% upside potential.
Based on our Insider Monkey database, by the end of Q2 2024, 179 investors held a positive outlook on NVDA, collectively holding stakes worth $53.7 billion.
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, artificial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefited 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.”
