4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 180
NVIDIA Corporation (NASDAQ:NVDA), based in Santa Clara, California, is a global provider of graphics, compute, and networking solutions. It is one of the top metaverse stocks to monitor. In September 2022, NVIDIA Corporation (NASDAQ:NVDA) introduced its inaugural software and infrastructure-as-a-service, called NVIDIA Omniverse Cloud. This suite of cloud services is designed for artists, developers, and enterprise teams, enabling them to create, publish, operate, and engage with metaverse applications from any location.
On February 7, Morgan Stanley increased its price target for NVIDIA Corporation (NASDAQ:NVDA), citing anticipated gains in artificial intelligence for the semiconductor company. Analyst Joseph Moore, with an Overweight rating on Nvidia, raised the price target to $750 from $603. This adjustment suggests approximately 10% potential upside from the current levels. Moore is optimistic about short-term data points indicating even more potential gains over the next two to three quarters.
According to Insider Monkey’s third quarter database, 180 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), compared to 175 funds in the prior quarter. Rajiv Jain’s GQG Partners is a prominent stakeholder of the company, with 14 million shares worth $6.10 billion.
Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:
“Apple and NVIDIA Corporation (NASDAQ:NVDA) alone drove over 1,100 basis points of the Russell 1000 Growth Index’s 42% return, so not owning them was a meaningful headwind to our relative return in 2023. NVIDIA shares rocketed higher by well over 200% in 2023 although they slightly underperformed our Portfolio and the Russell 1000 Growth in the fourth quarter. Generative AI has been a huge boon for NVIDIA as the use of LLMs like ChatGPT and others requires tremendous processing power that, today, is mostly provided by NVIDIA’s GPUs. All large cloud service providers, AI factories, and many large consumer internet companies are laying the foundation for generative AI by deploying NVIDIA GPUs and other parallel processing chips to be able to do large scale generative AI either for internal use (i.e., Meta) or as a service for others (i.e., AI factories) or both (cloud service providers such as Amazon, Microsoft, and Google).
Given many of NVIDIA’s customers or its end customers are still very much in the experimentation phase with generative AI, it is unclear how sustainable the current demand for GPUs truly is. At the same time, it is known that NVIDIA has historically been highly cyclical. By the end of 2024, we believe NVIDIA will already account for roughly half the market for datacenter chips, servers, and networking equipment, which is unprecedented. Even though the valuation at 25x forward earnings doesn’t look very demanding at first glance, it assumes NVIDIA will own virtually the entire datacenter chip market in just the next few years and will sustain year-on-year growth despite being a cyclical business that is currently experiencing much higher new peaks.
We believe NVIDIA is a highly advantaged business, but we also believe the long-term growth outcomes are currently too variable, and the expectations built into the company’s $1.2 trillion valuation as of this writing assume the most optimistic of those scenarios.”
