1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Shareholders In Q1 2024: 186
NVIDIA Corporation (NASDAQ:NVDA) is the unsurprising leader of our list of the best AI hardware stocks. The firm is showing no signs of slowing down, as it announced its next generation AI chips for 2026 in June 2024 at Computex in Taiwan. The resulting stock market frenzy saw NVIDIA Corporation (NASDAQ:NVDA) cross Apple in market valuation, but this was short lived, as a report next day outlined that the US government is investigating NVIDIA Corporation (NASDAQ:NVDA), Microsoft, and OpenAI for anti trust violations. This could prove to be a significant headwind to NVIDIA Corporation (NASDAQ:NVDA), but as of now, the shares are rated Strong Buy on average and the average analyst share price target is $1,208.
For their first quarter of 2024 investments, 186 hedge funds tracked by Insider Monkey were NVIDIA Corporation (NASDAQ:NVDA)’s stakeholders. Rajiv Jain’s GQG Partners owned the most valuable stake that was worth $12 billion.
Looking toward the future, the expected annual and five year revenue growth rate for NVIDIA Corporation (NASDAQ:NVDA) is currently 32.6% and 46.53%. The forward P/E is 46.73, which implies that the firm can outpace the broader market in growth. Baron Funds commented on NVIDIA Corporation (NASDAQ:NVDA)’s “disruptive” potential in its Q1 2024 investor letter where it shared:
We believe we are in the early stages of a multi-decade disruption. Jensen Huang, NVIDIA’s co-founder, president, and CEO suggested at the conference that similar to how in the industrial revolution, raw materials came into the plant and final products came out, in the GenAI era, companies would become AI factories with data as a raw material and tokens as the output. Tokens can represent words, images, videos, or controls of a robot. Over time, as models continue to improve, and the cost of running them declines, an increasing number of human tasks could be augmented or replaced entirely by AI. We expect decision making to become much more data-driven, enabled by AI, as consumers, corporations, and governments alike, take advantage of the vast amounts of unstructured data we generate, which is estimated to represent 90% of all data generated.
With increasingly challenging demographics across many economies (especially in developed markets), a greater proportion of global growth must come from productivity enhancements. AI, in our view, is likely to be a key driver behind these productivity gains, and potentially, the basis for technological breakthroughs that help humanity solve a host of the most difficult challenges from climate change to finding cures for diseases that have remained unsolved. We believe this disruptive change will be truly profound.
While we understand hedge funds’ and investors’ enthusiasm towards NVDA (we have been recommending a position in the stock for more than a year now), our conviction lies in the belief that some 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
