1) NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) operates as a technology company. It is engaged in developing a platform for scientific computing, AI, data science, autonomous vehicles, and robotics, and focuses on PC graphics.
The company’s intangible assets associated with its graphics processing units and increased switching costs concerning its proprietary software are expected to act as principal growth enablers. NVIDIA Corporation (NASDAQ:NVDA)’s roots revolve around gaming, and the company’s patents related to hardware design helped it achieve market leading position in gaming GPUs. As a result of this dominant position, the company was able to build economies of scale and invest in R&D efforts.
Spectrum-X Ethernet for Al and NVIDIA Al Enterprise software are the new product categories that are achieving significant scale. This demonstrates that NVIDIA Corporation (NASDAQ:NVDA) is a full-stack and data center-scale platform.
NVIDIA Corporation (NASDAQ:NVDA)’s advanced intellectual property has created significant barriers to entry, which was evident when Intel decided to license IP from this tech giant. Notably, the data centers remain critical to power Al systems which can perform difficult tasks, such as speech recognition and photo recognition. Therefore, NVIDIA Corporation (NASDAQ:NVDA) continues to focus on leveraging its GPU prowess in emerging areas like data centers and automotive.
Wall Street analysts believe that a new class of products, data processing units (DPUs), can handle certain tasks. This will allow CPUs to focus on core applications. These analysts anticipate that DPUs will become commonplace in all servers.
For 3Q 2025, the company’s revenue is expected to be $32.5 billion, plus or minus 2% and GAAP and non-GAAP gross margins should be in the range of 74.4% and 75.0%. In 2Q 2025, the company saw record quarterly revenue of $30.0 billion, exhibiting a rise of 15% from 1Q 2025 and 122% YoY. The revenues were supported by global data centers, which continue to focus on modernizing the entire computing stack with accelerated computing and generative Al.
UBS Group upped their price objective on the shares of NVIDIA Corporation (NASDAQ:NVDA) from $120.00 to $150.00. They gave a “Buy” rating on 8th July.
Fred Alger Management, an investment management company, released its second quarter 2024 investor letter and mentioned NVIDIA Corporation (NASDAQ:NVDA). Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption, in our view. During the quarter, the company reported better-than-expected fiscal first quarter results driven by strong demand from data centers. Additionally, management noted that large cloud service providers, contributing approximately 45% of data center sales, recognize the high return on investment offered by Nvidia’s computing solutions, which are driving AI spending. The company also introduced its next-generation H200 chip, which nearly doubles the inference performance compared to the H100 chip, enhancing how trained AI models process new data. Lastly, management raised their fiscal second quarter guidance, noting that demand for their current H100 chips remains strong, and that demand for their next generation products is estimated to outstrip supply over the next year. We continue to believe the company is well positioned to potentially benefit from the growing AI data center workloads, which are driving demand for the increased interconnections and fully accelerated software stacks, thereby enabling leading application performance and fast result times.”
Our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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