We recently compiled a list of the 10 Best Tech Stocks to Buy According to Brad Gerstner. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other tech stocks.
Gerstner is Bullish on Tech in 2024
On December 1, 2023, Brad Gerstner, the CEO of Altimeter Capital, appeared in an interview on CNBC where he explained that tech stocks are expected to outperform non-tech stocks in 2024. Over the past 10 years, tech earnings have compounded at almost 16% and non-tech earnings have compounded at 6%. 2023 was a rebound year for the tech industry after a downturn in 2022 due to rising interest rates. Big Tech companies and their operational efficiencies have poised them for strong growth. While inflation and interest rates will determine what goes down, companies that have invested in augmented intelligence will experience secular growth. Gerstner thinks that the spread between 16% and 6% will be a recurring trend in 2024.
Gerstner Thinks Now is the Right Time to Invest in Tech
On June 11, Brad Gerstner made another appearance on CNBC and addressed the speculation surrounding the software industry. Gerstner suggested that despite headwinds, the software industry is still valuable as companies and startups are still making deals. Gerstner believes there are three main reasons for the downward trajectory of the software industry. He thinks that CEOs and CTOs are cautious when it comes to making investments in software. Executives want a clearer picture of the AI boom before making risky investments. Moreover, interest rates are higher than expectations, due to delayed rate cuts and compressing multiples. Lastly, general uncertainty about the future has been detrimental to the growth of the software industry. Gerstner pointed out that since the software industry is trading at 20% below its ten-year average, this may be the best time to allocate stakes in software companies. You can also take a look at the best Robinhood stocks under $20.
Gerstner thinks data and databases are extremely vital to AI applications. He thinks that companies using data to power AI are far ahead of companies simply automating services. Big Tech companies have data at the forefront of all their artificial intelligence applications. You can also read our piece on the stocks hedge funds are crazy about right now.
Brad Gerstner is bullish on tech, and particularly software and AI. In Q1 2024, he initiated 6 new positions and also raised his stakes in 2 stocks, ending the quarter with a portfolio of $6.5 billion in 13F securities. With that, let’s discuss his top tech stock picks.
Our Methodology
We scanned Altimeter Capital’s Q1 portfolio and picked growth stocks from the fund’s top 13F holdings. Additionally, we’ve also added overall hedge fund sentiment, as of Q1 2024. 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).
Note: All pricing data is as of June 28.
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Altimeter Capital’s Stake Value: $716,654,096
Number of Hedge Fund Holders: 186
NVIDIA Corporation (NASDAQ:NVDA) ranks fourth on our list of the best tech stocks to buy according to Brad Gerstner. The company now calls itself the “Engine of AI” as it pioneers the hardware and software for AI. The company is a prominent chip provider to almost 80% of the market. It also designs and produces graphics processing units (GPUs) and provides cloud products to enterprises. NVIDIA Corporation (NASDAQ:NVDA reported $22.6 billion in data center revenue in Q1 2024, up by 23% from the previous quarter and 427% from a year ago. Compute and networking revenue drove data center revenue, growing by 5x and 3x than the previous year.
The company is expanding its footprint in the AI industry by forming strategic partnerships with other tech giants. In the first quarter of 2024, the company launched optimizations across NVIDIA’s data center and PC AI platforms for Gemma, in collaboration with Google. Gemma is Google’s family of open-source generative AI models for researchers and developers. Developers can now use Gemma on NVIDIA GPUs in the cloud and benefit from a range of features in the NVIDIA AI Enterprise platform.
Back in May 2023, Gerstner talked about Nvidia in an interview on CNBC. The hedge fund manager likes Nvidia for its dominant position in AI computing and he is also bullish on the stock. He said that the complete integration of AI demands solid hardware and software models, that Nvidia happens to own. Gerstner likes Nvidia and sees it as a dominant player in AI computing due to the company’s capabilities in producing effective models. Overall, 186 investors were bullish on the stock at the close of Q1 2024, with total stakes amounting to $48.3 billion.
Overall NVDA ranks 4th on our list of the best tech stocks to buy according to Brad Gerstner. You can visit 10 Best Tech Stocks to Buy According to Brad Gerstner to see the other tech stocks that are on hedge funds’ radar. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that 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.
