We recently published a list of Top 10 AI Stocks to Watch In February. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other top AI stocks to watch in February.
Barry Bannister, Stifel’s chief equity strategist, said in a latest program on CNBC that the macroeconomic factors are finally catching up to the AI-led bull market. He expects inflation to remain sticky and no further rate cuts from the Federal Reserve in the short term. The analyst also rejected the notion that the massive tech selloff after the launch of DeepSeek was a buying opportunity.
“Over 30 years ago, we used to joke about how technology was such a displacement event business where new competitors would come in and destroy the entrenched stocks, that it deserved a lower multiple because of that. It’s a short life cycle business that’s got a very short competitive advantage period. But investors forgot about that. They bid up the stocks. The growth relative to value large-cap total return, one divided by the other on a 10-year compound basis, reached the absolute outer limits of the past 90 years. And that exact limit line is exactly where it peaked—the price earnings multiple and the outperformance of growth. So, for us, it’s just a very bubbly market that’s just gotta take some air out of it.”
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For this article, we chose 10 AI stocks currently making moves in the market. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Megan Brantley from LikeFolio said in a latest program on Schwab Network that she sees “massive tailwinds” for Nvidia, especially after the Stargate project announcement despite valuation concerns.
“I think that right now really it’s a question of the valuation of NVIDIA Corp (NASDAQ:NVDA) and how high expectations are. For us, we see this and we just see massive tailwinds, especially in AI as just a macro trend at large. When you look at these investments, all those that you just mentioned, this should be a massive tailwind for NVIDIA Corp (NASDAQ:NVDA). Perhaps some of it is priced in. I think there’s a little bit of uncertainty from some investors saying, “Is this possible? Are these valuations possible for Nvidia to achieve?” But when we look at this, we look at this company and we say we constantly are seeing revisions to the upside when it comes to just how much companies are planning on investing in AI and ultimately utilizing NVIDIA Corp (NASDAQ:NVDA) products.”
Infuse Asset Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“We do still own some NVIDIA Corporation (NASDAQ:NVDA) as the forward multiple isn’t egregious and it powers over 90% of AI workloads. This company is only becoming increasingly important though the hyperscalers are actively trying to save money through their own ASIC programs. The moat CUDA provides has been underestimated time and time again. While I don’t think Nvidia has quite the upside as some of the other companies in the portfolio, it has a product that the best companies in the world literally can’t get enough of.”
Overall, NVDA ranks 2nd on our list of top AI stocks to watch in February. While we acknowledge the potential of NVDA, our conviction lies in the belief that under the radar 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.
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Disclosure: None. This article is originally published at Insider Monkey.
