5 Best Semiconductor Stocks to Buy Now

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 84

NVIDIA Corporation (NASDAQ:NVDA) is one of the largest semiconductor firms in the world, and one that is widely credited to have invented the modern day graphics processing unit (GPU). A GPU is a chip that aids a computer’s CPU in performing visual computing tasks such as rendering.

NVIDIA Corporation (NASDAQ:NVDA) is one of the heaviest spenders in capital expenditures in the industry, with its CapEx standing at a cool $433 million this year. Since the firm is primarily a chip designer, it does not have to invest heavily to sustain its operations. Therefore, a large chunk of this investment goes into growth, which then accretes into earnings down the road. NVIDIA Corporation (NASDAQ:NVDA)’s current price to earnings ratio of 47x offers it a strong valuation premium to both AMD and the broader NASDAQ 100.

Evercore ISI kept a $225 price target for NVIDIA Corporation (NASDAQ:NVDA) in September 2022, stressing that the firm will negate downsides through its strong product pipeline. 84 out of the 895 hedge fund portfolios analyzed by Insider Monkey during Q2 2022 had bought the company’s shares.

NVIDIA Corporation (NASDAQ:NVDA)’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 7.5 million shares that are worth $1.1 billion.

Baron Funds mentioned the company in its Q2 2022 investor letter and outlined that:

“At the company-specific level, there was a broad correction across the entire portfolio. While four of our holdings contributed to performance, the contribution to absolute returns was less than 100bps combined, as unfortunately none of them were large enough to move the needle. We had 16 investments detracting over 100bps each with NVIDIA (NASDAQ:NVDA), our second largest detractor, costing the Fund 254bps.

NVIDIA’s stock was hit even harder, down 44.4%, impacted by concerns over the health of the consumer, dramatic declines in crypto, and COVID-related lockdowns in China. Despite the sell-off and the increased near-term volatility in its gaming business, NVIDIA’s revenues grew 46% year-over-year with 48% operating margins, driven by continued strength in its data center business as companies across industries adopt AI and ML…” (Click here to see the full text)