FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
Our methodology:
We sifted through active subreddits and narrowed our list to the 10 best stocks by selecting the trending ones. Finally, these have been ranked in ascending order of their hedge fund sentiment, as of Q2 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10) Intuitive Machines, Inc. (NASDAQ:LUNR)
Number of hedge fund holders: 11
Intuitive Machines, Inc. (NASDAQ:LUNR) is a diversified space company, which is focused on space exploration. The company provides and supplies space products and services that enable sustained robotic and human exploration to the Moon, Mars, and beyond.
It is the only commercial operation that has a proven lunar capability. This gives the company a first-mover advantage in the growing lunar industry. Moreover, the company’s success in its first lunar mission further validates the technology and business model. Intuitive Machines, Inc. (NASDAQ:LUNR)’s strength of first-mover advantage is backed by strong links it has with NASA and proven earth-to-moon capability. Moreover, the company secured ~$70 million in new backlog, which provides some revenue visibility.
Intuitive Machines, Inc. (NASDAQ:LUNR) is the only company that has a lunar-to-earth commercial communications system, a well-established operational mission control building, and patent-protected technologies.
The company’s revenues are expected to be aided by promising joint ventures. It owns ~90% of Space Network Solutions, which won an OMES III contract to offer servicing of NASA’s LandSet-7, a satellite launched in 1999. Next, Jacobs Engineering Inc. and Intuitive Machines, Inc. (NASDAQ:LUNR) have entered into a partnership under a subcontracting agreement for NASA’s JSC engineering and Science program. Intuitive Machines, Inc. (NASDAQ:LUNR) expects full-year 2024 revenue of $210 million – $240 million, which exhibits 2.6x – 3x of its prior-year sales.
The company’s 2Q 2024 results highlighted its competitive advantages in offering delivery, data transmission, and autonomous operations. These are the 3 pillars of space commercialization. In 2Q 2024, the company’s revenues came in at $41.4 million, reflecting a rise of 130% year-over-year. This growth stemmed from the OMES, LTVS, and JETSON low-power nuclear satellite projects. The revenues included the effect of changes in estimates associated with NASA CLPS contract modifications.
Analysts at Benchmark restated a “Buy” rating on the shares of Intuitive Machines, Inc. (NASDAQ:LUNR), giving it a price target of $10.00 on 14th August. Intuitive Machines, Inc. (NASDAQ:LUNR) had 11 hedge funds long its stock in the second quarter, with a total stake value of ~$7.36 million.
9) AST SpaceMobile, Inc. (NASDAQ:ASTS)
Number of hedge fund holders: 15
AST SpaceMobile, Inc. (NASDAQ:ASTS) is a satellite designer and manufacturer. The company is focusing on building a global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on extensive IP and patent portfolio.
AST SpaceMobile, Inc. (NASDAQ:ASTS)’s scalability and advantageous cost position are expected to act as tailwinds over the medium term. Their satellite constellation’s design enables scalability regarding coverage area and number of users served. This allows them to grow as and when demand increases. By using existing mobile infrastructure and focusing on improving connectivity in areas that are underrepresented in network coverage, AST SpaceMobile, Inc. (NASDAQ:ASTS) can potentially provide cost-effective solutions compared to building new infrastructure from scratch. Also, vertical integration of 95% of satellite subsystems provides the company control over IP and manufacturing.
AST SpaceMobile, Inc. (NASDAQ:ASTS) is also expected to benefit from the recent announcement of a strategic partnership with Verizon Communications Inc. (NYSE:VZ). Apart from securing additional capital through prepayments and convertible notes, this partnership should accelerate AST SpaceMobile, Inc. (NASDAQ:ASTS)’s mission to eliminate connectivity gaps throughout the US. The company now seems to be strategically positioned to achieve the strong feat as it targets 100% geographical coverage throughout the continental U.S., which is the most valuable wireless market globally.
The company continues to work on the production and deployment of Block 2 satellites, with adjusted cash operating expenses to remain in the range of $30 million and $35 million per quarter for the rest of the year.
Scotiabank upped their target price on shares of AST SpaceMobile, Inc. (NASDAQ:ASTS) from $28.00 to $45.90, giving it a “Sector outperform” rating on 26th August.
8) Rocket Lab USA, Inc. (NASDAQ:RKLB)
Number of hedge fund holders: 15
Rocket Lab USA, Inc. (NASDAQ:RKLB) is engaged in space, building rockets, and spacecraft. The company offers end-to-end mission services which provide frequent and reliable access to space for civil, defense, and commercial markets.
The tiny rocket maker has made a strong start as it focused on getting closer to one of the most important customers: the U.S. government. This was evident when Rocket Lab USA, Inc. (NASDAQ:RKLB) decided in 2019 to invest millions of dollars in establishing a Launch Complex 2 (LC-2) in the US near the NASA facility on Wallops Island in Virginia. The investment indeed paid off as, in late 2023, the US Space Force named the company as one of its prime contractors. This led the company to fetch a $515 million contract to build satellites for a new missile defense system.
Recently, Space Force awarded Rocket Lab USA, Inc. (NASDAQ:RKLB) $14.5 million to launch an experimental “DISKSat” disk-shaped satellite. The new mission is under the scope of the Space Force’s Assured Access to Space program.
Rocket Lab USA, Inc. (NASDAQ:RKLB) is second only to SpaceX with respect to launching rockets for commercial use. Since SpaceX mainly focuses on larger payloads, Rocket Lab USA, Inc. (NASDAQ:RKLB) has a near monopoly in the small payload market. The company’s electron rocket has been able to establish itself as a leader in launch frequency and precision, while the upcoming Neutron vehicle should help the company expand its market presence. The development of the Neutron medium launch vehicle continues to progress on schedule, and the first launch is expected in the middle of the next year.
For 3Q 2024, the company expects revenue of between $100 million and $105 million. Notably, 4 analysts have given a “Hold” rating on the shares of Rocket Lab USA, Inc. (NASDAQ:RKLB), and 6 analysts gave a “Buy” rating. In the second quarter, 15 hedge funds had stakes worth $95.2 million in Rocket Lab USA, Inc. (NASDAQ:RKLB).
7) DTE Energy Company (NYSE:DTE)
Number of hedge fund holders: 25
DTE Energy Company (NYSE:DTE), a diversified energy company, is engaged in developing and managing energy-related businesses and services nationwide. The Company generates, purchases, transmits, distributes, and sells electric energy.
DTE Energy Company (NYSE:DTE)’s long-term growth prospects stem from its extensive and well-established utility infrastructure. Its regulated utilities, DTE Electric and DTE Gas, continue to address a substantial customer base in Michigan, which includes economically significant regions of southeastern Michigan and Detroit.
DTE Energy Company (NYSE:DTE)’s strategic investments in renewable energy, like wind and solar, and the company’s plans to retire coal-fired power plants by 2032 should help it achieve growth over the next 10 years. Also, these goals align with the increased demand for environmentally responsible energy solutions. This should enhance the DTE Energy Company (NYSE:DTE)’s brand reputation. The company will be able to capitalize on the promising market for clean energy and related government incentives. Collectively, these drivers should lead to long-term growth and profitability.
DTE Energy Company (NYSE:DTE) has an opportunity to expand its renewable energy portfolio. Given the fact that the state of Michigan requires a 100% clean energy portfolio by the year 2040, the company appears to be well-placed to exploit existing investments in renewables and capitalize on this regulatory tailwind. It invested more than ~$2 billion in 1H 2024, on pace for a full-year investment of over $4 billion. The focus is on making electric and natural gas infrastructure more resilient.
Therefore, its strong financial health and constructive regulatory environment should support the company in generating healthy and stable cash flows.
Wells Fargo & Company upped their price objective on shares of DTE Energy Company (NYSE:DTE) from $125.00 to $133.00, giving it an “Overweight” rating on 26th July.
6) Antero Midstream Corporation (NYSE:AM)
Number of hedge fund holders: 28
Antero Midstream Corporation (NYSE:AM) is a midstream company, that owns, operates, and develops midstream energy infrastructure services and production activity in the Appalachian Basin’s Marcellus Shale and Utica Shale located in West Virginia and Ohio.
Natural gas has a very bright future because it is a cleaner commodity than coal and is seeing quicker adoption by fast-growing emerging markets. Courtesy of power generation, adoption by industrial markets, hydrogen applications, and transportation markets, the demand for natural gas is expected to remain elevated for the foreseeable future. Midstream companies tend to benefit from increased natural gas volumes because they offer the infrastructure that is required to process and ship natural gas.
Antero Midstream Corporation (NYSE:AM) should benefit from its majority market share because it operates the midstream assets of Antero Resources. This company is a producer having deep reserves and industry-leading breakeven prices in the Appalachian Basin. After going through the business, it was understood that 100% of the company’s cash generation is backed by fixed-fee contracts, which mitigates the commodity risk.
Also, Antero Midstream Corporation (NYSE:AM) should benefit from its recent ~$70 million strategic acquisition from Summit Midstream Corporation (NYSE:SMC), which also includes assets in the Marcellus Shale. This acquisition is expected to be immediately accretive to free cash flow for Antero Midstream Corporation (NYSE:AM) and should support future development plans.
Morgan Stanley upped their price target on the shares of Antero Midstream Corporation (NYSE:AM) from $15.00 to $16.00, giving it an “Underweight” rating on 27th August. At the end of 2Q 2024, 28 hedge funds tracked by Insider Monkey held stakes in Antero Midstream Corporation (NYSE:AM).
5) Gartner, Inc. (NYSE:IT)
Number of hedge fund holders: 35
Gartner, Inc. (NYSE:IT) delivers actionable and objective insight to executives and their teams. It carries out operations via 3 business segments, namely Research, Conferences and Consulting.
Over the medium term, the company’s revenue and earnings growth is expected to be supported by its large global footprint and established customer base. Gartner, Inc. (NYSE:IT) can distribute intellectual property and expertise throughout various platforms and business segments to achieve incremental revenue and profitability.
Gartner, Inc. (NYSE:IT)’s core subscription research businesses are expected to see strong growth in upcoming quarters. For companies evaluating the opportunities and risks of Al on their businesses, Gartner, Inc. (NYSE:IT) is expected to act as a decision support resource. This should help the company achieve volume growth and pricing realization. As a result of revenue growth and focus on cost control, the company should see margin expansion and enhanced FCF generation.
Gartner, Inc. (NYSE:IT) has updated its full-year guidance, with research revenue expected to touch at least $5.105 billion and total FCF expected to be at least $1.08 billion. The company’s research revenues increased by $58.1 million on a YoY basis during 2Q 2024 primarily because of research contract value growth. Also, its EBITDA for 2Q 2024 touched $416 million, reflecting an 8% increase YoY. The company repurchased $340 million of its stock and it now has more than $1 billion in repurchase capacity remaining.
In the second quarter, 35 hedge funds held stakes in Gartner, Inc. (NYSE:IT) totalling $1.11 billion. Analysts at UBS Group initiated the coverage on the shares of Gartner, Inc. (NYSE:IT), and raised their price objective from $510.00 to $580.00. They gave a “Buy” rating on 31st July. Baron Funds, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said about Gartner, Inc. (NYSE:IT):
“Shares of Gartner, Inc. (NYSE:IT), the leading provider of syndicated research to the IT sector, contributed to performance. Fourth quarter financial results were mixed, with declines in net income and EPS. However, solid increases in contract value and strong full-year performance, including a 9% increase in net income and an 11% rise in diluted EPS, helped boost the company’s share price. In addition, a 19% increase in free cash flow for the quarter and 6% for the full year underscored Gartner’s operational efficiency. Gartner’s core subscription research businesses compounded at attractive rates, and we believe growth is poised to accelerate. We think Gartner will emerge as a key decision support resource for every company evaluating the opportunities and risks of AI on its business, providing a tailwind to volume growth and pricing realization. We expect Gartner’s sustained revenue growth and focus on cost control to drive continued margin expansion and enhanced free-cash-flow generation. The company’s balance sheet is in excellent shape and can support aggressive repurchases and bolt-on acquisitions, in our view.”
4) Hewlett Packard Enterprise Company (NYSE:HPE)
Number of hedge fund holders: 58
Hewlett Packard Enterprise Company (NYSE:HPE) is a supplier of IT infrastructure products and services.
Hewlett Packard Enterprise Company (NYSE:HPE) saw its 3Q 2024 revenues jump by 10% YoY to $7.7 billion, beating the analysts’ expectations. This outperformance was supported by a surge in server revenue because of demand for artificial intelligence. The company’s edge-to-cloud strategy throughout networking, hybrid cloud, and Al should continue to act as a critical tailwind moving forward. Hewlett Packard Enterprise Company (NYSE:HPE) increased its full-year EPS outlook to $1.68 and $1.73 (from $1.61 to $1.71 previously). However, it maintained a revenue growth estimate of 1% – 3%.
Hewlett Packard Enterprise Company (NYSE:HPE) is well-placed to capitalize on the demand for Al servers, which has been picking up due to increased investments in Al infrastructure by businesses. Hewlett Packard Enterprise Company (NYSE:HPE)’s stock is well-placed to take off as its cyclical slowdown is ending, and Al-driven sales of its newer servers should help offset the weakness of other business segments.
Moving forward, the company’s expertise in designing, manufacturing, and running Al systems at scale should help it fuel the growth of cumulative Al system orders. This, together with prudent cost management and expectations of high FCF, should help Hewlett Packard Enterprise Company (NYSE:HPE) over the medium term.
Analysts at Bank of America upped their price objective on shares of Hewlett Packard Enterprise Company (NYSE:HPE) from $22.00 to $24.00, giving it a “Neutral” rating on 21st June. As per Insider Monkey’s 2Q 2024 database, 58 hedge funds were long Hewlett Packard Enterprise Company (NYSE:HPE).
3) Tesla, Inc. (NASDAQ:TSLA)
Number of hedge fund holders: 85
Tesla, Inc. (NASDAQ:TSLA) is a vertically integrated sustainable energy company, aiming to transition the world to electric mobility by making electric vehicles.
The company’s intangible assets (brand value) and cost advantages are expected to act as primary drivers of revenue growth in upcoming years. Its strong brand cachet as a luxury automaker results in premium pricing, and EV manufacturing expertise allows the company to manufacture vehicles more cheaply as compared to competitors.
Tesla, Inc. (NASDAQ:TSLA)’s entry into high-performance computing is backed by the company’s strategic initiatives revolving around artificial intelligence (AI) and machine learning (ML). The company has envisioned a future in which both these technologies will play a central role in enhancing the capabilities of its vehicles.
Tesla, Inc. (NASDAQ:TSLA)’s supercomputer, Dojo, is expected to be a computing giant by 2024 end. With forecasts pointing to an expansion to 300,000 GPUs, Wall Street analysts believe that this supercomputer should achieve 100 ExaFLOPs of compute power. This is expected to further solidify the company’s lead in integrating AI and ML in its products.
Moving forward, the company’s focus on reducing its vehicle manufacturing costs, accelerating the launch of new models, and huge investments in lucrative AI initiatives should drive long-term growth.
In 2Q 2024, Tesla, Inc. (NASDAQ:TSLA) achieved record quarterly revenues amidst the difficult operating environment. Its Energy Storage business has been growing rapidly, setting a record in 2Q 2024 with 9.4 GWh of deployments. This resulted in record revenues and gross profits for the overall segment. Tesla, Inc. (NASDAQ:TSLA)’s plans for new vehicles, which include more affordable models, are on track for the start of production in 1H 2025. These vehicles are expected to utilize aspects of the next-generation and current platforms.
The number of hedge funds tracked by Insider Monkey owning stakes in Tesla, Inc. (NASDAQ:TSLA) grew to 85 in 2Q 2024, from 74 in the previous quarter.
China Renaissance raised the shares of Tesla, Inc. (NASDAQ:TSLA) from a “Hold” rating to a “Buy” rating. They gave a price target of $290.00 on 5th July. Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
2) Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of hedge fund holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) produces semiconductor products and devices. It provides products like microprocessors, embedded microprocessors, chipsets, graphics, and supplies them to third-party foundries. Also, it provides assembling, testing, and packaging services.
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s recent CPU and GPU offerings appear to be more competitive with Intel’s and Nvidia’s products and it uses leading-edge process technologies. Its GPUs are highly sought after when it comes to cryptocurrency mining. With the improved outlook for blockchain technology, the company is well-positioned to take advantage. The company primarily benefits from intangible assets associated with its x86 instruction set architecture license, together with expertise in chip design.
Advanced Micro Devices, Inc. (NASDAQ:AMD) boasts a strong portfolio of Al data center products, ranging from accelerators to FPGAs. As a result of this portfolio, the company enjoys an ‘end-to-end Al platform.
In addition to the mentioned growth drivers, the company should significantly benefit from its recent acquisition. The company announced a definitive agreement to acquire ZT Systems for the consideration of $4.9 billion. This should help Advanced Micro Devices, Inc. (NASDAQ:AMD) in enhancing its expertise in Al infrastructure systems and services.
Advanced Micro Devices, Inc. (NASDAQ:AMD)’s 2Q 2024 results were supported by healthy growth in the Data Center and Client segments. The company saw record data center segment revenue of $2.8 billion, exhibiting a rise of 115% YoY mainly because of the steep ramp of AMD Instinct™ GPU shipments, and strong growth in 4th Gen AMD EPYC™ CPU sales.
Rosenblatt Securities reiterated a “Buy” rating on the shares of Advanced Micro Devices, Inc. (NASDAQ:AMD), setting a price target of $250.00 on 31st July.
Fred Alger Management, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a major global supplier of PC microprocessors and graphics processors to computing original equipment manufacturers (OEMs). The company’s product range spans desktops, notebooks, servers, graphics, and embedded/semi-custom chips. AMD operates in a large addressable market, covering areas such as PCs, servers, high-end gaming, and deep learning. Additionally, AMD has introduced competitive AI technologies, including powerful accelerators poised to capture a share in a market worth several hundred billion dollars. During the quarter, the company reported fiscal first-quarter operating results that met analyst estimates, with strengths in data center GPUs and server CPUs offsetting weaknesses in their gaming and embedded businesses. Moreover, management raised their fiscal second-quarter revenue guidance, albeit slightly below consensus estimates, where they expected double digit growth in data center revenues, while projecting a decline in their gaming segment, driven by weaknesses in both desktop GPUs and Semi-Custom Systems-on-a-Chip (SoC). While weaker-than-expected near-term results weighed on shares during the quarter, we believe the company is positioning itself to potentially benefit from long-term growth in AI infrastructure spending. Specifically, the company continues to gain server CPU market share, which could potentially accelerate as traditional compute deployments begin to recover.”
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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