We recently compiled a list of the 20 Trending AI Stocks on Latest Analyst Ratings and News. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other trending AI stocks.
Global management consulting firm Bain & Company recently released a report on the artificial intelligence industry, highlighting that AI was driving an unprecedented wave of technological change, with the market for AI products and services projected to reach between $780 billion and $990 billion by 2027. Per the research done by Bain, major cloud services providers were at the forefront of AI research and development, pushing the boundaries of larger models, advanced infrastructure, and energy efficiency. These hyperscalers were focusing on the development of larger, more complex models that demanded significant computational power and resources, leading to the need for data centers with energy capacities up to gigawatts, potentially straining energy grids and supply chains.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
Bain underlined that while the big players dominated the high end of the market with expansive models and enormous data centers, innovation was also thriving in smaller models. These smaller, domain-specific models were being deployed at the edge, where they were more cost-effective, energy-efficient, and capable of addressing real-time processing needs, particularly in applications like autonomous driving. The proliferation of models like Llama, Claude, and Gemini illustrated how AI was evolving rapidly beyond just a few proprietary models, with many options now open-source or specialized for particular tasks.
The research further detailed that the rapid growth in AI workloads, particularly with data-heavy applications, was also reshaping the technology landscape. The need for increased storage, computing power, and memory was driving innovations in data center design, networking, and storage technologies. Per Bain, chip companies and particularly GPU makers were expanding beyond their core graphics processing units to include integrated solutions that improved the efficiency of AI models, with their products now combining compute, memory, and networking capabilities. The competition was also spurring the development of vertically integrated AI solutions, where tech companies designed everything from hardware to software to optimize AI performance.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds.
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).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. David Tepper, the chief of Florida-based investment firm Appaloosa Management, has urged investors to be cautious about investing in the chipmaker because of uncertainty around the long-term growth prospects of artificial intelligence. Tepper made the comments during an appearance on news platform CNBC last week. The hedge fund manager, who reduced a major stake in NVIDIA on behalf of his fund in the second quarter of 2024, per latest 13F filings, said he sold the stock because he thought it was too high at the time and would come down. Tepper expressed disappointment that he could not buy the shares when they came back down.
Tepper, whose hedge fund owns nearly $85 million worth of NVIDIA stock despite the recent reduction, acknowledged that NVIDIA Corporation (NASDAQ:NVDA) was a major player in the AI boom and could still have some upside, but expressed doubts about the sustainability of AI demand. He questioned whether there was enough power for AI growth and whether next generation models could take their chips.
Overall NVDA ranks 1st on our list of the trending AI stocks. While we acknowledge the potential of NVDA as an 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 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.