Harvard University Stock Portfolio: Top 10 Stock Picks

5. NVIDIA Corporation (NASDAQ:NVDA)

Harvard Management Company’s Stake: $115.1 million

NVIDIA Corporation (NASDAQ:NVDA) is a leader in graphics computing and networking solutions, with high demand for its GPUs, especially in gaming and AI applications.

On October 29, NVIDIA Corporation (NASDAQ:NVDA) unveiled its new Enterprise Reference Architectures, which are blueprints designed to help partners and customers build AI factories. More recently, on November 6, the Wall Street darling announced a collaboration with Hugging Face to advance open-source AI robotics research and development.

As NVIDIA Corporation (NASDAQ:NVDA) prepares to report its October quarter earnings on November 20, Citi anticipates a “smaller ‘beat & raise’” due to the company’s ongoing transition to the Blackwell chip series. Citi analyst Atif Malik expects results to align closely with projections, with total and data center sales forecasted at $33 billion and $29 billion, slightly below the consensus estimates of $34 billion and $30 billion. For the January quarter, Malik raised the data center forecast, anticipating an additional $3-4 billion in sales from Blackwell, as NVIDIA Corporation (NASDAQ:NVDA) has resolved production issues but remains supply-constrained. Citi now estimates January quarter total and data center sales at $36.5 billion and $32 billion, just below market expectations of $37.5 billion and $33 billion, with a projected gross margin of 73%—approximately 30 basis points under consensus due to a higher mix of H200 chips.

Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:

“In a reversal from the past two quarters, NVIDIA Corporation (NASDAQ:NVDA) represented our top relative contributor this quarter, despite the modest underperformance, declining -1.7%. In many ways, NVIDIA was a microcosm of the broader market’s heightened volatility. Beneath the placid surface, the company experienced a 27% drawdown followed by a +31% rally, only to repeat the cycle with a -21% drawdown followed by a subsequent 20% rally to finish the quarter. In our view, the stock’s volatility goes beyond fundamental business drivers, but the company in turn benefitted from increasing capital spending budgets from cloud service providers and large enterprises for generative AI (“GenAI”) infrastructure spending. Simultaneously, the stock endured weakness related to the delayed next-generation Blackwell chip, and an earnings forecast that exceeded expectations, albeit not as much as some investors hoped. While we continue to believe NVIDIA is a highly advantaged business, with significant demand for their chips and servers ahead of the need for that hardware from real-world businesses, we are cautious about its growth sustainability since it lacks recurring revenue.”