We recently compiled a list of the 12 Best Long-term Stocks to Invest in for High Returns. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks.
The global economy seems to be at a point where fiscal ambition intersects with market skepticism, says Oakglen Wealth. Donald Trump’s presidential election and the Republican takeover of the US Senate and retention of the House of Representatives resulted in a complicated mix of policy goals. Notably, the broader market’s initial reaction hints at positivity given Trump’s plans for growth, hinting at the continued outperformance of US assets in the year ahead.
Sectors To Focus on in 2025
Fidelity has an optimistic view of the financial sector, primarily because of steady economic growth for the broader US economy. Since the financial sector is cyclical, the sector’s performance is mainly a function of the strength of the broader economy. The US economy has been showing momentum and a path towards the desired “soft landing,” says Fidelity. Therefore, worries about a mild recession (which could have impacted the financial stocks) are alleviated. One significant difference in market dynamics entering 2025, in comparison to recent years, is the outlook on interest rates.
The H2 2024 began a new rate cycle, with the US Fed cutting rates for the first time since the initial days of the pandemic. Banks might benefit from higher interest rates due to higher NIMs. On the other hand, lower rates can help boost confidence and decrease the pressure on economic growth, which is expected to be beneficial for virtually all industries in this sector, opines Fidelity. Within equities, Franklin Templeton has an optimistic outlook on IT, health care, energy, consumer staples, and industrial sectors.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Growth Drivers Amidst Policy Shifts
As per Russell Investments, the US economy is resilient as it enters 2025, but the road ahead is expected to be affected by shifting policy dynamics. On the positive side, tax cuts and deregulation can offer a meaningful growth boost, mainly to domestic and cyclical sectors. The investment firm believes that companies leveraging AI technologies to enhance productivity—mainly in industrials and healthcare— are expected to see material improvements to operating fundamentals.
Even though the mega-cap AI stocks have fueled the market returns over recent years, leadership has been shifting to companies leveraging AI to develop real-world efficiencies. Russell Investments believes that the Trump administration’s policies offer a delicate balancing act. It assumes that the new administration will not aggressively pursue policies that can create inflation risk.
Our Methodology
To list the 12 Best Long-term Stocks to Invest in for High Returns, we sifted through several financial media reports related to the best long-term stocks to buy. After getting an initial list of 20 stocks, we chose the ones which analysts saw the most upside to. Finally, the stocks were ranked in ascending order of their average upside potential, as of February 6. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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)
Average Upside Potential: 36.0%
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is a leading designer of discrete graphics processing units that enhance the experience on computing platforms. Joseph Moore of Morgan Stanley gave an “Overweight” rating on the company’s stock, providing a price target of $152. The analyst noted that China’s DeepSeek, an AI model matching its American rivals in performance and at a much cheaper cost, established some challenges for NVIDIA Corporation (NASDAQ:NVDA) around export controls and longer-term investment. Despite these challenges, Moore opines that near-term checks remain strong for its Hopper platform. The analyst believes that Blackwell’s supply visibility has been building and that customers’ desire to spend remains clearly visible.
Elsewhere, Ivan Feinseth of Tigress Financial upped the company’s stock to “Strong Buy,” raising its price objective to $220. Even though DeepSeek’s R1 AI model has been claiming competitive features at lower costs, Tigress Financial noted unknown capabilities and security concerns. The firm lauded NVIDIA Corporation (NASDAQ:NVDA)’s critical role in AI and data center growth and sees it as a long-term beneficiary of continued investments. Furthermore, lawmakers in the US have plans to ban DeepSeek.
The AI infrastructure build-out continues to act as a major tailwind for NVIDIA Corporation (NASDAQ:NVDA). Notably, cloud service providers, sovereign states, and consumer internet companies have been fueling demand for AI computing power. Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. In our view, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption. Shares contributed to performance during the quarter, driven by strong demand for its data center products, especially the Hopper H200 chips, which generated double-digit billions in revenue, marking the fastest product ramp in the company’s history. Management provided fiscal fourth-quarter revenue guidance above analyst estimates, along with resilient operating margins supported by robust demand and limited competition. In our view, Nvidia’s leadership in scaling AI infrastructure, including advancements in inference and test-time scaling (i.e., reasoning during inference), is driving adoption among enterprises and startups, providing continued demand for its high-performance chips and software solutions. As older-generation chips are repurposed for inference and new clusters are deployed, we believe Nvidia is well-positioned to capitalize on growing compute needs across AI applications.”
Overall NVDA ranks 5th on our list of the best long-term stocks to invest in for high returns. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
