1. NVIDIA Corp. (NASDAQ:NVDA)
5-Year Net Income CAGR: 56.73%
TTM Net Profit Margin: 55.04%
Number of Hedge Fund Holders: 179
NVIDIA Corp. (NASDAQ:NVDA) is the pioneer of GPU-accelerated computing, specializing in products and platforms for the large, growing markets of gaming, professional visualization, data center, and automotive. Its GPUs have been instrumental in driving advancements in various fields, including deep learning, autonomous vehicles, and virtual reality.
NetApp has launched a new AI tool utilizing NVIDIA technology. Elon Musk’s xAI is leveraging 100,000 NVIDIA H100 GPUs for its AI project, Colossal, with potential future expansion to include H200 GPUs and Blackwell chips.
NVIDIA Corp. (NASDAQ:NVDA) has formed a strategic partnership with Accenture to accelerate AI innovation. Its AI chip, Blackwell, is now in mass production and experiencing high demand. A partnership with Salesforce is established to enhance businesses’ utilization of AI and data. In September, the company introduced Aerial, an AI tool designed to optimize wireless networks for various devices. Its proprietary software, CUDA, provides a competitive edge. The company’s continued success hinges on its ability to sustain innovation and monetize AI effectively.
The company’s CEO believes its competitive advantage in AI chips is sustainable. Snowflake, a cloud data warehousing company, that utilizes Nvidia’s AI Enterprise software to integrate NeMo Retriever microservices into its Snowflake Cortex AI, has seen its stock price rise 10% in the past month due to strong prospects driven by a strong portfolio and expanding partner base.
The recent earnings beat, upwardly revised guidance, and upward stock movement all point to a potential continued upward trajectory. Investors may want to consider adding NVIDIA Corp. (NASDAQ:NVDA) to their watchlist or portfolios given its positive momentum.
Vltava Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“Over the summer, we devoted a lot of time to studying the AI-related investment wave. This spans a wide range of sectors and our view could be very briefly summarised as follows: The first-tier beneficiaries are primarily companies in the semiconductor sector, NVIDIA Corporation (NASDAQ:NVDA) perhaps the most. That company is benefiting from the huge increase in investment by large technology companies to build enormous data centres. We know who NVIDIA’s customers are. They are companies like Meta, Alphabet, Amazon, and Microsoft. They are investing hundreds of billions of dollars into their AI capabilities. What is not entirely clear, however, is who are and will be the customers of NVIDIA’s customers, and, more importantly, when, and if, they will be able to come up with such huge demand for AI services that the profits from AI will justify and pay for the enormous investments all these companies have been making. The further we move away from the starting point that NVIDIA represents in our more broadly-reaching estimates, the lessreliable those estimates are.So far, we know just one thing for sure, and that is that investments in AI capabilities are ongoing and they are huge. They are not only bringing large demand to chipmakers and the semiconductor sector but to some other sectors as well. Indeed, building AI clusters also requires the construction of new semiconductor factories, new energy sources, and all the associated infrastructure. The numbers under consideration are incredibly high. It is possible that over the next decade the construction of AI centres will necessitate a 20% increase in US energy consumption. The investment required will be measured not in the hundreds of billions of dollars, but in an order of magnitude higher. Maybe two orders of magnitude.”
While we acknowledge the growth potential of NVIDIA Corp. (NASDAQ:NVDA), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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