5 Stocks Jensen Huang’s Company is Betting On

1. Arm Holdings plc (NASDAQ:ARM)

Arm Holdings plc (NASDAQ:ARM) is known for its CPU and semiconductor-related technologies which it licenses to other major semiconductor players in the industry. The company’s products are used in everyday devices like smartphones and laptops. Even though the biggest semiconductor company in the world has trimmed down its position in the stock, it continues to have a significant holding worth $135 million, the highest investment in a company according to the recent filing.

ARM is an integral part of the current AI ecosystem and should remain so in the future as well. The company’s business model allows it to earn recurring revenue through licensing deals. With it being an integral part of the ecosystem, these royalties and licensing deals aren’t going away anytime soon.

This also begs the question of whether the current valuation is justified. At over 100 times future earnings, the stock is overvalued. However, it could stay permanently overvalued due to the nature of its business. Investors focusing on quality stocks will have no problem buying the stock at these valuations, as these are likely to stay.

Arm Holdings plc (NASDAQ:ARM) is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held ARM at the end of the third quarter which was 38 in the previous quarter. While we acknowledge the potential of ARM as a leading AI investment, 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 as promising as ARM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article was originally published at Insider Monkey.