1. NVIDIA Corporation (NASDAQ:NVDA)
5-Year Revenue CAGR: 56.73%
TTM Net Income: $53.009 billion
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) specializes in graphics, computing, and networking solutions, gaining recognition for its powerful graphics processing units (GPUs). While it started in gaming, the company has expanded into professional visualization, data centers, and automotive industries. It is also actively expanding its footing in other major growth industries such as AI and 5G. It tops our list of most profitable growth stocks.
Although the company’s stock fell after its Q2 results, this was expected due to delays in the Blackwell GPU, which will not affect its core design or growth potential. Moreover, the demand for Blackwell GPU is strong as reported by Morgan Stanley. The firm reported that the demand for the company’s Blackwell NVL36/72 systems is so high that they are sold out for the next year.
Wedbush analyst Dan Ives has reiterated that NVIDIA (NASDAQ:NVDA) will greatly benefit from increased spending on AI. He noted that the demand for AI chips is skyrocketing, and expects that the AI infrastructure market could grow tenfold by 2027, with $1 trillion in spending expected over the next three years.
At the March 2024 GPU Technology Conference, CEO Jensen Huang estimated annual spending on data center infrastructure to be around $250 billion, with total spending over the next decade potentially reaching $1 trillion to $2 trillion as countries invest in AI.
While NVIDIA won’t capture the entire $2 trillion market due to competition from AMD and tech giants like Google and Amazon, analysts believe NVIDIA (NASDAQ:NVDA) could secure over $950 billion in market share from 2025 to 2029, making it a leader in the data center sector.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, 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: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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