This article presents an overview of the 5 Best AI Stocks for 2024. For a detailed overview of more such stocks read our article, 10 Best AI Stocks for 2024.
5. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 180
NVIDIA Corp (NASDAQ:NVDA) is perhaps one of the most obvious names in any AI stock recommendation list on the Wall Street these days. Despite having tripled in 2023, NVIDIA Corp’s (NASDAQ:NVDA) valuation has been attracting many analysts. In December 2023, Stacy Rasgon, Bernstein Research senior semiconductor analyst, said that NVIDIA Corp (NASDAQ:NVDA) was the cheapest of the AI stocks in the market. He was referring to NVIDIA Corp’s (NASDAQ:NVDA) relatively low earnings multiples seen in December when compared to peers. Since the start of 2024 the stock has gained about 6%.
Joseph Moore, Morgan Stanley semiconductor analyst, recently said in a program on CNBC that NVIDIA Corp (NASDAQ:NVDA) will “find ways” to fill the China portfolio of their business. He was referring to the US-China tensions and America’s new policies affecting US chipmakers’ exports to China.
As of the end of the third quarter of 2023, 180 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in NVIDIA Corp (NASDAQ:NVDA).
In its fourth quarter 2023 investor letter, ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA):
“Much of that differential can be attributed to the performance of the Magnificent Seven (Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla), a basket of mega cap growth stocks that accounted for 47.8% of the benchmark return for the quarter and 65.4% for 2023.
The ClearBridge Large Cap Growth Strategy maintains exposure to six of the seven stocks, with overweights in Amazon.com, Meta and NVIDIA Corporation (NASDAQ:NVDA). Those three stocks, as well as Microsoft, were among the leading contributors to Strategy performance for the quarter. Microsoft and Nvidia continued to be supported by strong execution and leadership positions in the implementation of generative artificial intelligence (AI).
These are high-quality, cash flow generative businesses that we will continue to own, actively adjusting our positioning sizes based on risk/reward and portfolio construction priorities. With Nvidia shares more than tripling in 2023, we opportunistically took profits throughout the year, an approach that continued in the fourth quarter with additional trims that brought the position down to 6% of overall assets.
Active management of our mega cap exposure contributed to the Strategy outperforming the benchmark both in the fourth quarter and through the narrow leadership market of 2023. We also attribute these improved results to solid stock picking, being opportunistic in adding to or initiating new positions in growth companies at or near the bottom of their earnings cycle, and maintaining a commitment to diversification across our three buckets of growth: select, stable and cyclical.”