4. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 173
Jim Cramer has been a big believer in NVIDIA Corp (NASDAQ:NVDA), recommending the stock almost every week since late 2023. However, amid the recent lackluster performance of NVIDIA Corp (NASDAQ:NVDA), Cramer sounded a bit disappointed, saying the stock now seems to “rally far less than it goes down.”
However, Cramer reiterated that he believes NVIDIA Corp (NASDAQ:NVDA) is a stock to own, not trade.
Despite concerns around valuation, Wall Street continues to shower positive ratings on NVIDIA Corp (NASDAQ:NVDA). Recently, Wells Fargo’s Aaron Rakers increased his price target for NVIDIA Corp (NASDAQ:NVDA) to $1,150 from $970, citing data center strengths.
NVIDIA Corp (NASDAQ:NVDA) bulls believe the company is just getting started since we are in a very early stage of AI adaption phase where companies are testing their AI products. NVIDIA Corp (NASDAQ:NVDA) is currently the leader in the AI chips industry with an 84% market share.
As of the end of the last quarter of 2023, 173 hedge funds tracked by Insider Monkey had stakes in NVIDIA Corp (NASDAQ:NVDA). The most significant stake in NVIDIA Corp (NASDAQ:NVDA) is owned by Rajiv Jain’s GQG Partners which owns a $6.8 billion stake in NVIDIA Corp (NASDAQ:NVDA).
Patient Capital Opportunity Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“This quarter we entered two new positions, while exiting four positions. Our first new position was NVIDIA Corporation (NASDAQ:NVDA), which we bought early in the quarter. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and FCF an astounding 126%, 392%, and 610%, respectively, over the last year. While much of the focus is on Nvidia’s market cap reaching $2.3T, up 230% over the last year, the company’s valuation has actually come down over that period. As of 3/31/23, consensus was valuing the company at 61x forward EPS. This compares to today, where the company is being valued at 37x. While yes, we have never seen a company expand their market cap by so much so quickly, we have also never seen a company grow their fundamental earnings and cash generation so quickly (and which is actually expanding faster than valuation). While competitors are working to enter the GPU space, Nvidia has created a moat around their GPUs with their CUDA software offering. While we do expect the large cloud players to continue to move into the market, we think NVDA can continue to demand top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of accelerated computing and artificial intelligence (AI).
Nvidia Corp. (NVDA) was a top performer in the quarter gaining 82.5% in the period. While the company has had an impressive run, gaining 242% over the last year, the valuation has been supported by the impressive growth in Revenue (126%), EPS (392%) and free cash flow (610%) over the last year. The company has solidified its position in the GPU space supported by its proprietary software CUDA. While we expect competition to increase, we think NVDA can continue to maintain top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
