In this article, we discuss the 12 most profitable growth stocks to invest in along with the latest market trends.
After the September inflation report, the market did feel a slight bit of panic but it seems to be fading away. After the report, the market expectations for a rate cut shifted, with 79.9% of participants predicting a cut to 450-475 basis points, while 20.1% expect the rates to remain unchanged. It was a change from 32.1% expecting a 50 bps rate cut and 67.9% anticipating a 25 bps cut at the beginning of the month as mentioned in our 8 Most Profitable Blue Chip Stocks to Invest in article.
However, on October 11, the CME FedWatch tool showed that 89.5% of the market now expects a 25 bps rate cut and the rest expect it to remain the same.
Market Corrections Ahead but No Bear Market in Sight
Christian Mueller-Glissmann from Goldman Sachs joined CNBC’s ‘Squawk Box’ to discuss the latest market trends. He believes that the stock market pullback in August could be a warning of more potential corrections, but he does not see a severe bear market ahead. His overall outlook is positive due to a healthy macroeconomic environment, where growth remains stable, inflation is under control, and central banks are starting to reduce rates. These factors create a favorable setting for equities and other risk assets.
He pointed out that while bullish market positioning contributed to August’s setback, the combination of declining inflation and rate cuts allows central banks to cushion against financial shocks, minimizing the risk of a deep downturn.
Mueller-Glissmann highlighted two key reasons for not expecting a major market decline: inflation has significantly dropped, giving central banks more flexibility, and price momentum over the past 6-12 months suggests a strong macroeconomic backdrop. With the labor market improving, he sees no signs of an economic downturn.
His strategy focuses on quality growth stocks that are temporarily undervalued and cyclical value stocks that could recover as the market stabilizes. Regarding inflation, he noted a shift from inflation relief to growth as the main market driver, raising concerns about inflation resurfacing if growth strengthens. However, he remains confident that inflation will stay anchored, and disinflation will continue into the year’s end.
12 Most Profitable Growth Stocks To Invest In
Our Methodology
For this article, we used stock screeners to identify nearly 25 growth stocks above the market cap of $10 billion with a 5-year revenue compound annual growth rate (CAGR) of 30% or above. Next, we narrowed our list to 12 stocks with the highest TTM net income. We also mentioned the hedge fund sentiment around each stock, which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Most Profitable Growth Stocks To Invest In
12. Kinsale Capital Group, Inc. (NYSE:KNSL)
5-Year Revenue CAGR: 40.29%
TTM Net Income: $371 million
Number of Hedge Fund Holders: 28
One of the most profitable growth stocks, Kinsale Capital Group, Inc. (NYSE:KNSL) is a property and casualty insurance company focused on the excess and surplus lines (E&S) market in the U.S., where it underwrites challenging and hard-to-place risks for small businesses and personal lines. The company operates across all 50 states, Puerto Rico, and the U.S. Virgin Islands through independent brokers.
According to the company, it uses technology to drive efficiency in underwriting and claims processing, which contributes to a low expense ratio. It also maintains a strong balance sheet, with conservative loss reserves and investments, to build trust among stakeholders. The company distributes its products through independent brokers and its own subsidiary, Aspera Insurance Services.
According to Polen Capital, Kinsale (NYSE:KNSL) prioritizes efficiency, technology, and strong underwriting, which drives its above-average growth and returns, often outperforming competitors. Its focus on smaller accounts and difficult-to-insure risks, alongside its tech-driven operations and disciplined approach, provides a competitive edge. These strengths, along with solid financial performance and growth potential, make the company an attractive portfolio choice.
Apart from Polen Capital, Baron Funds also holds a bullish sentiment on the company,, and here is what the firm said in its Q2 2024 investor letter:
“Shares of specialty insurer Kinsale Capital Group, Inc. (NYSE:KNSL) gave back some gains from earlier this year after the company reported slower premium growth in the first quarter. Earnings beat Street expectations with 44% EPS growth and 43% growth in book value per share. However, investors focused on the slowdown in gross written premiums to 25% growth from 34% last quarter, reflecting tough comparisons and moderating growth in property insurance. We continue to own the stock because we believe Kinsale is well managed and has a long runway for growth in an attractive segment of the insurance market. Recall that Kinsale was one of our best performers last quarter, and we believe we can endure some volatility to achieve strong long-term returns.”
11. Futu Holdings Limited (NASDAQ:FUTU)
5-Year Revenue CAGR: 61.84%
TTM Net Income: $540.4 million
Number of Hedge Fund Holders: 27
Futu Holdings Limited (NASDAQ:FUTU) is a fintech company, that operates digital platforms Futubull and Moomoo, which offers stock trading, market data, financial news, and investor education across the U.S., Hong Kong, China, Singapore, Australia, Japan, Canada, and Malaysia.
It holds over 100 licenses globally, including licenses from Hong Kong’s Securities and Futures Commission, the U.S. SEC, the Singapore Exchange, and the Australian Securities and Investments Commission. It also provides margin financing, wealth management, ESOP solutions, and IPO distribution. Its goal is to become a leading global financial platform through innovation and improved user experience. The company ranks at 11 on our list of most profitable growth stocks.
On August 26, Futu (NASDAQ:FUTU) announced that S&P Global Ratings maintained a stable outlook and reaffirmed Futu’s long-term issuer credit rating at BBB-. The company’s Hong Kong securities firm has a stand-alone credit profile of bbb. S&P highlighted its strong market position in Hong Kong and expected continued growth in its international operations, supported by its solid capitalization and funding profile.
In Q2, the company added 155,000 new paying clients, marking a 168% year-over-year growth. By the end of the quarter, it surpassed 2 million paying clients, with a 29% year-over-year increase and 8% quarter-over-quarter growth. The company raised its 2024 client growth guidance to 550,000 due to strong momentum. Client growth in Hong Kong, Singapore, and Japan was notable, with Malaysia contributing the most new clients despite slower growth. The company launched cryptocurrency trading in Hong Kong and Singapore, capitalizing on the favorable regulatory environment.
10. Block, Inc. (NYSE:SQ)
5-Year Revenue CAGR: 42.87%
TTM Net Income: $681 million
Number of Hedge Fund Holders: 59
Block, Inc. (NYSE:SQ), formerly known as Square, Inc., is building a network of ecosystems that cater to distinct customer groups, including sellers, consumers, artists, fans, and developers. These interconnected ecosystems are designed to foster economic empowerment through a suite of integrated tools and services that work together to address diverse needs. It is one of the most profitable growth stocks to invest in.
Its two primary ecosystems are Square, which offers solutions for businesses, and Cash App, focused on consumer financial services. Cash App started as a money transfer service but has grown into a full financial ecosystem that offers a variety of tools to help users store, send, invest, borrow, and save money.
Block (NYSE:SQ) is also investing in emerging ecosystems like TIDAL, which empowers artists and connects them with fans, and its Bitcoin ecosystem, which includes platforms and tools aimed at decentralizing financial systems.
The company’s approach focuses on developing resilient connections between these ecosystems, which promotes innovation and addresses market inefficiencies, with an emphasis on AI and financial empowerment.
On October 5, The Fly reported that BMO Capital lowered its price target for Block from $93 to $92 while maintaining an Outperform rating. The firm highlighted fintech stocks’ underperformance compared to the Financial Select Sector SPDR Fund (XLF) and the S&P 500 this year, though it remains optimistic about the sector’s medium-term prospects.
BMO expects investors to reward consistent execution and growth, especially in gross profit acceleration. For Block (NYSE:SQ), the firm anticipates that ongoing efforts to address product, reliability, and distribution challenges will pave the way for an increase in gross payment volume (GPV) in 2025, despite ongoing macroeconomic concerns.
9. Genmab A/S (NASDAQ:GMAB)
5-Year Revenue CAGR: 42.83%
TTM Net Income: $795.6 million
Number of Hedge Fund Holders: 13
Genmab A/S (NASDAQ:GMAB) is a global biotechnology company focused on improving patient outcomes through innovative antibody therapeutics. Over the past 25 years, its dedicated team has developed advanced antibody technology platforms and utilized cutting-edge sciences to build a robust pipeline.
Genmab (NASDAQ:GMAB) has established over 20 partnerships with top biotech and pharmaceutical companies, which improves its capacity to advance novel therapies. In August, the European Commission granted conditional marketing authorization for TEPKINLY (epcoritamab), a subcutaneous bispecific antibody for adults with relapsed or refractory follicular lymphoma.
The approval marks TEPKINLY as the first of its kind, designed to target and eliminate cancerous B-cells and improve the immune system’s response against lymphoma. By 2030, Genmab aims to revolutionize the treatment of cancer and other serious diseases with its groundbreaking antibody medicines.
In July, Genmab (NASDAQ:GMAB) announced that the U.S. FDA has approved EPKINLY (epcoritamab-bysp) for treating adults with relapsed or refractory follicular lymphoma (FL) after two or more lines of systemic therapy. This approval makes EPKINLY the first and only subcutaneously administered T-cell engaging bispecific antibody approved for FL in the U.S.
The approval is based on results from the Phase 1/2 EPCORE NHL-1 clinical trial, which showed an 82% overall response rate and a 60% complete response rate in patients with difficult-to-treat FL. EPKINLY is also approved for diffuse large B-cell lymphoma and is seen as a potential key therapy for B-cell malignancies. The company takes the 9th spot on our list of most profitable growth stocks to invest in.
8. Zoom Video Communications, Inc. (NASDAQ:ZM)
5-Year Revenue CAGR: 58.14%
TTM Net Income: $875.37 million
Number of Hedge Fund Holders: 39
Another one of the most profitable growth stocks, Zoom Video Communications, Inc. (NASDAQ:ZM) offers a unified platform for communication and collaboration, combining tools like video meetings, phone, chat, and content sharing. Key categories include core communications, AI, employee and customer experience, and a developer ecosystem.
Some of its products include Zoom Meetings for HD video calls, Zoom Phone for cloud-based phone systems, and Zoom Team Chat for team collaboration. AI-driven tools like Zoom AI Companion enhance productivity, while Zoom Rooms and Workspace Reservation optimize meeting and workspace management.
For customer engagement, Zoom (NASDAQ:ZM) provides solutions like Zoom Contact Center and Zoom Webinars for virtual events. Its developer platform allows easy app integration, and the company’s infrastructure ensures high performance across devices and networks.
At Zoomtopia 2024, Zoom (NASDAQ:ZM) introduced new AI-driven innovations for Zoom Workplace and Zoom Business Services, aiming to transform team collaboration and productivity.
Some important updates include Zoom AI Companion 2.0, which offers persistent access, improved context understanding, web connectivity, and task automation across Zoom Workplace. A custom add-on for AI Companion will allow personalized experiences and integration with third-party apps, priced at $12 per user per month, launching in 2025.
Zoom Tasks will assist users in managing their workflow by detecting and recommending tasks. Additions to Zoom Phone and Zoom Docs will further improve meeting efficiency and document collaboration. Zoom (NASDAQ:ZM) also introduced industry-specific solutions for healthcare, education, and frontline workers, all supported by AI to optimize work processes.
7. Super Micro Computer, Inc. (NASDAQ:SMCI)
5-Year Revenue CAGR: 33.68%
TTM Net Income: $1.208 billion
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) provides application-optimized IT solutions The company delivers innovative infrastructure for Enterprise, Cloud, AI, and 5G Telco/Edge markets, offering a wide range of products including servers, AI systems, storage, IoT devices, switches, and software. It is one of the most profitable growth stocks.
It designs and manufactures its products in-house in the US, Taiwan, and the Netherlands, focusing on scalability, efficiency, and environmental sustainability. Its Server Building Block Solutions allow customers to tailor systems to specific workloads using flexible and reusable components across various configurations.
The company is constantly innovating and moving ahead in the tech and AI space and adding products to its pipeline for future revenue growth. On October 3, Bloomberg reported that Super Micro Computer (NASDAQ:SMCI) announced a partnership with Fujitsu to develop energy-efficient servers for generative AI and high-performance computing, focusing on liquid-cooled systems for green data centers. The collaboration aims to create a platform featuring Fujitsu’s FUJITSU-MONAKA processor, set for release in 2027.
On October 7, Super Micro Computer (NASDAQ:SMCI) revealed a comprehensive liquid cooling solution for data centers, which improves energy efficiency and reduces costs for AI and HPC workloads. The solution includes coolant distribution units, cold plates, cooling towers, and lifecycle management software, all designed to handle high-wattage servers with the latest NVIDIA GPUs and CPUs.
Supermicro’s liquid cooling reduces power consumption by up to 40% and saves up to 80% in space and eliminates the need for traditional cooling systems. The company has deployed over 100,000 NVIDIA GPUs with this technology, optimizing AI factory performance and increasing computing power in a smaller footprint.
Finally, on October 10, Super Micro Computer (NASDAQ:SMCI) introduced a new lineup of servers and GPU-accelerated systems featuring AMD EPYC 9005 Series CPUs and AMD Instinct MI325X GPUs, designed for AI-ready data centers. The H14 family includes several configurations, such as Hyper, CloudDC, GrandTwin, and FlexTwin systems, which support AI inference and enterprise workloads.
These systems offer improved performance, with up to 192 CPU cores per unit, and advanced cooling options, including both air and liquid cooling. The H14 family is optimized for power efficiency, reducing data center footprint by over two-thirds, while enabling faster AI processing and improved operational efficiency.
6. Shopify Inc. (NYSE:SHOP)
5-Year Revenue CAGR: 43.04%
TTM Net Income: $1.273 billion
Number of Hedge Fund Holders: 56
Sixth on our list of most profitable growth stocks is Shopify Inc. (NYSE:SHOP), a global commerce company that provides essential tools for businesses to start, scale, and run efficiently. Its platform supports multiple sales channels, including online storefronts, social media, and physical locations, allowing merchants to manage all aspects of their business through a single dashboard.
Its cloud-based infrastructure provides data insights for informed decision-making while ensuring security and privacy. The platform also emphasizes brand ownership, mobile commerce, and global reach, with features like localized storefronts and simplified cross-border sales. its scalable infrastructure supports merchants of all sizes, offering enterprise-level functionality without requiring re-platforming.
One of Shopify’s (NYSE:SHOP) growth prospects is its lending program, Shopify Capital, which has provided $5.1 billion in loans to merchants. This program offers loans based on merchant revenue, challenging traditional banks and venture funds by addressing small and medium-sized businesses often overlooked by conventional lenders.
With APRs ranging from 32% to 45%, the loans generate significant revenue and profit for Shopify (NYSE:SHOP). By selling these loans as securities, it can reinvest in other areas, or it can retain the loans for high returns, both fueling further growth. This profitable lending model enhances the company’s appeal as an investment.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
5-Year Revenue CAGR: 31.70%
TTM Net Income: $1.354 billion
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company offering central processing units (CPU), graphics processing units (GPU), accelerated processing units (APU), data processing units (DPU), field-programmable gate arrays (FPGA), and System-on-chip (SoC) for data centers, personal computers, gaming, and embedded systems. It makes it to the 5th spot on our list of most profitable growth stocks.
The company’s data center segment provides server-class CPUs, GPUs, AI accelerators, DPUs, FPGAs, SmartNICs, and Adaptive SoCs designed to advance performance, energy efficiency, and scalability for various workloads. Products include AMD EPYC server processors, AMD Instinct GPUs for AI and supercomputing, Alveo accelerator cards, and Pensando DPUs for optimized data center performance.
These technologies target the growing demands of modern data centers, offering solutions for AI processing, cloud services, and technical computing while improving power and space efficiency.
At Advancing AI 2024, the company introduced a range of advanced AI solutions, including 5th Gen EPYC processors, AMD Instinct MI325X accelerators, and Ryzen AI PRO processors for enterprise AI. The company highlighted its leadership in AI-driven data center solutions with EPYC CPUs, Instinct GPUs, and Pensando DPUs, which power major AI workloads for companies like Google, Meta, and Microsoft.
Its open-source ROCm software also supports over one million AI models. New products like the Ryzen AI PRO 300 Series offer high AI performance and enterprise security. Partners like Dell and Oracle also showed how they use the company’s technologies to drive innovation in AI infrastructure.
Its 5th Gen EPYC processors offer top-tier performance for data center workloads, including AI, cloud, and enterprise applications. Built on the “Zen 5” architecture, these CPUs deliver up to 37% better instructions per clock for AI and HPC tasks. The flagship 192-core EPYC 9965 processor outperforms competitors in AI workloads, with significant gains in performance for business applications, HPC, and virtualized infrastructure.
The EPYC 9575F, optimized for AI, can drive faster results in large-scale AI clusters. These processors also offer energy efficiency, enabling up to 71% less power usage and 87% fewer servers for the same workloads, with wide support from leading OEMs.
On October 10, Roth MKM analyst Suji Desilva maintained a Buy rating and $200 price target on Advanced Micro Devices (NASDAQ:AMD). The analyst believes in a strong opportunity in the growing AI infrastructure sector for the stock. He highlighted the company’s hardware, software platform, and Ethernet networking advancements, especially its EPYC processors, which improve high-scale AI inferencing. Desilva also praised Advanced Micro Devices (NASDAQ:AMD) Instinct GPU roadmap and called it a key part of the company’s integrated AI infrastructure offering.
4. MercadoLibre, Inc. (NASDAQ:MELI)
5-Year Revenue CAGR: 56.85%
TTM Net Income: $1.4 billion
Number of Hedge Fund Holders: 84
One of the most profitable growth stocks, MercadoLibre, Inc. (NASDAQ:MELI) is the leading online commerce ecosystem in Latin America, known for its e-commerce and fintech platforms. Operating in 18 countries, including Argentina, Brazil, and Mexico, it serves a region with over 650 million people.
Its e-commerce platform connects buyers and sellers, fostering a strong online community, while its fintech arm, MercadoPago, provides financial services such as online payments, debit cards, savings, investments, and credit for both individuals and merchants. The company’s technology solutions address the unique challenges of the region’s growing internet and e-commerce markets.
MercadoLibre’s (NASDAQ:MELI) survey on consumer trends in Argentina shows that consumption has been recovering since May. In August, the platform achieved a record 20 million units sold, with technology products leading the growth.
More buyers and SMEs joined, and the credit portfolio grew by 69% year-over-year, boosting consumer and business financing. Rental and property supply also tripled, driven by changes in laws, while vehicle inquiries increased by 10% in September. These trends reflect a recovery in Argentine consumption patterns.
Moreover, according to the company, seasonality impacts its business, with the fourth quarter being the strongest due to holiday shopping, while the first quarter tends to slow down due to summer vacations and holidays in several countries. However, geographical diversity helps balance these effects. This could mean that the company could potentially record a very strong fourth quarter this year.
3. Tesla, Inc. (NASDAQ:TSLA)
5-Year Revenue CAGR: 30.75%
TTM Net Income: $12.427 billion
Number of Hedge Fund Holders: 85
Taking the third spot on our list of most profitable growth stocks is Tesla, Inc. (NASDAQ:TSLA), a leader in the electric vehicle sector, mostly for transforming the automotive and clean energy industry. The company focuses on the design, production, and sale of battery electric vehicles, as well as providing advanced energy storage systems and solar products.
The company made significant noise in the market at the “We, Robot” event on October 10. The CEO, Elon Musk unveiled two innovative vehicles, the Cybercab and the Robovan. The former is a car with no steering wheel or pedals while the latter is shaped like a modern train buggy that can carry up to 20 passengers or transport cargo.
The Cybercab is projected to cost under $30,000 and is expected to be produced from 2026. Musk described this occasion as a pivotal moment for Tesla (NASDAQ:TSLA), comparable to the launch of the Model 3 in 2017.
Musk also emphasized significant advancements in the company’s humanoid robot, Optimus, which is designed to handle various everyday tasks. He projected that the robot could be priced between $20,000 and $30,000, making it potentially accessible for consumers.
He said that Optimus robots will be the company’s most significant product as he envisions a future where these personal robots do everyday tasks for owners. The robots were seen dancing at the event and serving drinks to the attendees.
He suggested that all the technologies that we have already seen are being used in the development of Optimus. He said, “It’s just a robot with arms and legs instead of a robot with wheels. And we’ve made a lot of progress.”
Following the event, Wedbush reiterated its Outperform rating and a $300 price target on Tesla (NASDAQ:TSLA). The firm expressed optimism about its autonomous vehicle strategy, especially the Cybercab, which they found highly impressive in person.
The firm believes that Cybercab could become a $10 billion annual business for the company in the coming years. However, the firm highlighted regulatory, insurance, and launch challenges Tesla (NASDAQ:TSLA) must navigate for future growth.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
2. PDD Holdings Inc. (NASDAQ:PDD)
5-Year Revenue CAGR: 74.92%
TTM Net Income: $13.751 billion
Number of Hedge Fund Holders: 86
PDD Holdings Inc. (NASDAQ:PDD) is a global commerce group that operates various businesses, including the e-commerce platforms Pinduoduo and Temu. Pinduoduo offers a wide selection of products, ranging from agricultural goods and clothing to electronics, furniture, and personal care items. Temu is an online marketplace designed to connect businesses with consumers in the digital space.
The company management is making moves to improve its business significantly. The company is focusing on diverse consumer needs and has expanded its offerings in various categories, particularly in lower-tier cities. It experienced significant growth in the number of new merchants and agricultural vendors in recent quarters.
In the second quarter, PDD (NASDAQ:PDD) reported a remarkable increase in total revenues driven by online marketing and transaction services. However, management also highlighted rising costs, especially in fulfillment and operational expenses.
The company reported total revenues of RMB 97 billion (RMB 1 = US$0.14), representing an impressive year-over-year growth of 86%. The operating profit also experienced significant growth with a GAAP operating profit of RMB 32.6 billion, up from RMB 12.7 billion a year prior. The company closed the quarter with a healthy cash position of RMB 284.9 billion.
PDD (NASDAQ:PDD) is also trading at quite cheap levels. It is trading at a forward price-to-earnings ratio of 11.74, a nearly 30.4% discount to its sector median. Additionally, analysts expect a nearly 83.5% increase in its EPS this year.
Hayden Capital stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q2 2024 investor letter:
“PDD Holdings Inc. (NASDAQ:PDD): A few weeks ago, Latepost (a leading Chinese technology news outlet) confirmed Pinduoduo’s online grocery initiative is solidly profitable (LINK). According to the article, Duoduo Grocery is able to achieve ~5% net profit margins in competitive markets (where they go up against Meituan Select). In non-competitive markets, they can achieve ~10 – 15% net margins.
The company doesn’t disclose the exact scale of Duoduo Grocery, but our calculations indicate it’s likely around ~RMB 300BN this year, and still growing in the double-digits. At that level, the division is likely contributing ~US $2.5BN in annual profits.
It’s an impressive result, but admittedly, not a huge needle-mover in light of the total $17.6BN net profits the company is expected to make this year (~14% of overall profits)…” (Click here to read the full text)
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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