4. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
NVIDIA Corp (NASDAQ:NVDA) remains one of the “top picks” among large-cap generative artificial intelligence companies, according to William Blair. “The company has already seen tremendous growth for its GPU and parallel computing systems, and we believe there is time for continued growth, driven by robust training demand from hyperscalers and enterprises, and a ramping inference opportunity,” said William Blair analysts Sebastien Naji and Jason Ader in a detailed investor note.
NVIDIA Corp (NASDAQ:NVDA) has also built a strong competitive advantage, with its CUDA software stack being the standard interface for GPUs and AI, Naji added. Both training and inference offer further growth potential as the new Blackwell cycle gets underway.
Nvidia’s declines after the Q2 results were more or less expected amid Blackwell delay reports confirmed by management. However, the delays were mainly due to a change in Blackwell GPU mask. That does not affect the main functional logic or design of the chip, according to analysts. While Blackwell has been delayed for a few months, it does not change the core growth thesis for Nvidia.
Nvidia is set to see huge growth on the back of the data center boom amid the AI wave.
At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at about $250 billion. Over the next decade, this could total between $1 trillion and $2 trillion, depending on how long this level of investment continues. During the same Q&A session, Bank of America’s Vivek Arya echoed this estimate, suggesting the total addressable market would fall in the $1-2 trillion range, particularly as countries invest in their own AI infrastructure. By the end of the decade, spending could be at the high end of that range.
Of course, Nvidia won’t dominate the entire $2 trillion opportunity, as it faces competition from companies like AMD and internally developed AI accelerators from Google, Amazon, and even Apple. Some analysts believe Nvidia’s data center market share between 2025 to 2029 will be over $950 billion—less than half of the total market—but still enough to make it the leader in the sector.
ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“This focus on consistency also guides our regular trimming of strong performers to manage stock-specific and overall portfolio risk. The quarter saw us continue to trim NVIDIA Corporation (NASDAQ:NVDA), reducing the GPU chipmaker from an active weight in the portfolio to an underweight versus the benchmark. We continue to believe in Nvidia’s 10-year trajectory as hyperscaler and enterprise customers invest in GPU architecture. However, we have reduced our Nvidia position as its valuation now more fully reflects the company’s robust growth path and as estimates have risen to levels that require a very steep growth trajectory to drive further stock appreciation.”
