1. NVIDIA Corp. (NASDAQ:NVDA)
Upside Potential: 36%
Number of hedge funds: 193
NVIDIA Corp. (NASDAQ:NVDA) designs and manufactures graphics processing units (GPUs), system on a chip units (SoCs), and AI hardware and software. It primarily serves four major markets: Data Center, Gaming, Professional Visualization, and Automotive. For data centers, NVIDIA provides accelerated computing platforms and end-to-end networking solutions, including Quantum for InfiniBand and Spectrum for Ethernet, along with platforms for automated driving and AI Enterprise.
NVIDIA Corp. (NASDAQ:NVDA) has evolved from a PC gaming GPU company to a dominant player in the accelerated computing space, offering full-stack computing infrastructure with data-center-scale solutions. The company’s strength is evident in its commanding over 80% market share in GPUs. NVIDIA has greatly benefited from the growing adoption of AI and machine learning technologies, driving strong demand for its chips. The company’s revenue, profitability, and market capitalization have surged since the introduction of GenAI models like ChatGPT.
In the past year, NVIDIA Corp. (NASDAQ:NVDA) stock rose 109%, significantly outperforming the broader S&P 500 Index, which increased by only 24%. Despite a recent selloff triggered by news related to Deepseek, the stock remains a consensus Buy among analysts, who still see an upside of around 36%. Theo Mass, portfolio manager at Northcape Capital, recently remarked that the 17% overnight plunge in Nvidia shares was ‘wildly overdone,’ as it did not fundamentally change the growth outlook for NVIDIA Corp. (NASDAQ:NVDA). Addressing concerns about Deepseek potentially hampering demand, Northcape Capital remains bullish on NVIDIA’s outlook. As Mr. Mass stated:
“The biggest game in town that these mega-cap tech companies and US chip suppliers are pursuing is still inference AI over the next five to 10 years. While training has been a significant start to the AI phenomenon, in five or 10 years, Deepseek will be a small start-up in the grand scheme of things. Nvidia has noted that 40% of their revenue is already related to inference AI, and they welcome some competition and optimization in these models. So, I’m still bullish on Nvidia.”
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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