1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a leading company in the technology sector, well known for its work in graphics processing units (GPUs) and artificial intelligence. Originally focused on enhancing the gaming experience, the company revolutionized computer graphics with the release of its GPU in 1999, which significantly improved both video game performance and 3D applications.
Over the years, the company diversified its offerings to include central processing units (CPUs), data processing units (DPUs), and various software solutions for high-performance computing and deep learning. The company now operates in industries ranging from gaming and professional visualization to data centers, automotive, and healthcare. The company tops our list of best momentum stocks.
A major upcoming product from NVIDIA (NASDAQ:NVDA) is the Blackwell line, expected to drive considerable revenue and bring innovations to the industry. With improvements in supply chain conditions, orders for Blackwell products are increasing. CEO Jensen Huang has confirmed that the company is ramping up Blackwell GPU production and aims to begin shipments by the fourth quarter. While some engineering issues may delay certain releases, the company remains on course to scale up production as it moves forward into the next year.
The company is expected to benefit from significant growth driven by the AI-driven data center expansion. At the GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at around $250 billion, potentially reaching between $1 trillion and $2 trillion over the next decade.
While the company will face competition from companies such as AMD and AI accelerators developed by Google, Amazon, and Apple, analysts expect NVIDIA’s (NASDAQ:NVDA) data center market share between 2025 and 2029 to exceed $950 billion. Despite the competition, the company is expected to be the dominant force in the market.
NVIDIA (NASDAQ:NVDA) also recently introduced its new series of multimodal large language models, NVLM 1.0, which performs at the highest level on both vision-language and text tasks.
According to the company, it competes with top proprietary models like GPT-4o and open-access ones such as Llama 3-V 405B and also improves on text-only tasks after multimodal training. The model weights and training code are being made open-source through Megatron-Core.
The model excels in various multimodal tasks, such as following instructions, recognizing humor, reasoning, and solving math problems step-by-step. It uses a hybrid architecture that improves training efficiency and accuracy, along with a unique 1-D tile-tagging design for high-resolution image tasks.
The company’s LLM stands as a new major competitor in the industry that META and Alphabet dominated.
Generation Investment Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“Recent net performance is behind market averages. However since the fund’s inception, we have spent only about 8% of the time underperforming on a rolling five-year basis.1 We do not enjoy these spells. A number of different factors has contributed to the current period of underperformance. The fact that we do not own NVIDIA Corporation (NASDAQ:NVDA) is one. That single company accounted for roughly 25% of returns in the benchmark so far this year, meaning almost everyone who does not own Nvidia has lost out. Year-to-date, not owning Nvidia explains about a third of our relative underperformance.
Nvidia is, clearly, an earnings juggernaut. In the past year its revenue has more than tripled, as cloud companies load up on hardware to power AI models. So while its earnings multiple has increased, we are not seeing a repeat of the dotcom mania of the late 1990s. This company’s valuation is backed by cold, hard cash…” (Click here to read the full text)
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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