1. NVIDIA Corporation (NASDAQ:NVDA)
Year-To-Date Gain as of November 6: 181.03%
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) continues to lead in artificial intelligence, driven by the high demand for its graphic processing units (GPUs), which are essential for powering AI models. The company offers cutting-edge computing and networking solutions, with its GPUs seeing strong demand in both gaming and AI applications, solidifying NVIDIA as a favorite on Wall Street.
Goldman Sachs raised its price target for NVIDIA Corporation (NASDAQ:NVDA) to $150 from $135 per share in a note on October 11, reflecting an 11% potential upside. The bank highlighted NVIDIA’s competitive edge, which is built on factors like its large installed base, continuous innovation at both the chip and data center levels, and a growing portfolio of software solutions, including NVIDIA Parabricks for genomics analysis and NVIDIA AI Aerial for cloud-native 5G networks.
NVIDIA Corporation (NASDAQ:NVDA) shares surged to a record high on November 7, making it the first company to reach a $3.6 trillion market valuation as Wall Street’s rally continued, buoyed by Donald Trump’s return to the White House. Moreover, the company has led the U.S. stock market in gains amid an intense competition among Microsoft, Alphabet, and other major players to expand their AI computing power and capture leadership in this fast-growing sector, with its stock having risen more than 206% year-to-date.
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 potential of NVDA, our conviction lies in the belief that certain 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: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
