2) NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is the designer of discrete graphics processing units that enhance the experience on computing platforms. Its chips are used in several end markets, such as high-end PCs for gaming, data centers, and automotive infotainment systems. The company accounts for over ~90% of the market share for GPUs.
NVIDIA Corporation (NASDAQ:NVDA)’s competitive moat remains powerful as it has been investing for more than a decade in software in such a way that allows its hardware to outperform regular silicon. This outperformance takes place as a result of software optimizations and acceleration libraries which are updated constantly.
Undoubtedly, NVIDIA Corporation (NASDAQ:NVDA) has a strong economic moat, thanks to its intangible assets regarding its graphics processing units, and switching costs involved around its proprietary software, like the CUDA platform for AI tools. This lets developers use the company’s GPUs to build AI models. Just like iOS, which locks people into the iPhone since developers are making applications for the iPhone, market experts believe that this same thing is happening for NVIDIA Corporation (NASDAQ:NVDA). The AI engineers are learning the CUDA platform to program GPUs.
The company released its 2Q 2024 financial results, with record quarterly revenue of $30.0 billion, up by 15% from 1Q 2023 and up by 122% on a YoY basis. The company’s record revenues were supported by the fact that global data centers continue to modernize the entire computing stack with accelerated computing and generative AI.
Rosenblatt Securities reaffirmed a “Buy” rating on the shares of NVIDIA Corporation (NASDAQ:NVDA), giving a price target of $200.00 on 29th August.
Aoris Investment Management, a specialist international equity manager, released its Q2 2024 investor letter and mentioned NVIDIA Corporation (NASDAQ:NVDA). Here is what the fund said:
“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.”
