We recently published a list of 10 Tech Stocks with High Upside Potential. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other tech stocks with high upside potential.
As per Forrester Research, Inc., despite persistent inflation, the US real GDP is expected to increase 2.7% in 2025 and the US tech spending is projected to see growth of 6.1% to touch a staggering $2.7 trillion. The software spending in the US is expected to increase by 10.7% in 2025. With the escalation in cybersecurity risks, companies continue to leverage cloud and GenAI technologies to fuel future growth and innovation.
AI to Drive Growth in Tech Sector in 2025
The largest US stocks, also referred to as the Magnificent 7, have seen a strong run over the previous 2 years, mainly due to the buildout of AI infrastructure, says Goldman Sachs. Sung Cho, co-head of US Fundamental Equity in Goldman Sachs Asset Management. Cho believes this buildout can significantly benefit data and security companies, and software companies successfully integrating AI in their existing product set. As the Fed continues to cut rates, the smaller tech companies – which saw contraction in their multiples because of higher rates – might see a favourable macro backdrop.
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Robust AI Investments are On the Horizon
UBS has highlighted how AI has and will continue to drive the growth of the broader technology sector. As per the firm, since the rollout of ChatGPT in November 2022, the total market capitalization of companies listed on the US technology exchange NASDAQ increased to ~US$13.5 trillion. Notably, around two-thirds of this value increase has been directly caused by the AI sector. Moving forward, the decisive factor is expected to be the extent to which significant investments in AI-based infrastructure can be translated into profitable business models.
While highlighting the consensus estimates, UBS stated that the 4 major US technology corporations are projected to invest ~US$280 billion in AI this year. Given the increased usage of this key technology across industries, value creation processes are expected to be optimized. This can lead to significant productivity gains. One such area is the market for robotics and automation, which is expected to reach a sales volume of ~US$350 billion in 2025, says UBS analysts. Notably, humanoid robotics will be the key area of particular interest because of the innovations.
Our Methodology
To list the 10 Tech Stocks with High Upside Potential, we used a screener and shortlisted the stocks catering to the broader technology sector. Next, we filtered out the stocks having an average upside potential of at least ~30%, as of February 28. Finally, the stocks were arranged in ascending order of their average upside potential. We also mentioned the hedge fund sentiments around each stock, as of Q4 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 373.4% since May 2014, beating its benchmark by 218 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: ~40%
Number of Hedge Fund Holders: 223
TD Cowen analyst Joshua Buchalter reiterated the bullish stance on NVIDIA Corporation (NASDAQ:NVDA)’s stock, offering a “Buy” rating on February 25. The rating is backed by a combination of factors highlighting its healthy market position and future potential. As per the analyst, the demand for Blackwell products is projected to remain strong, which can alleviate some of the market’s concerns. Furthermore, NVIDIA Corporation (NASDAQ:NVDA)’s advancements in AI infrastructure, mainly with model innovations and optimizations, placed it well for future growth.
The analyst believes that the flexibility of Blackwell systems to serve training and inference needs, together with the company’s comprehensive software ecosystem, reinforces its competitive advantage. Elsewhere, Stacy Rasgon from Bernstein maintained a “Buy” rating on the company’s stock with a price objective of $185.00. NVIDIA Corporation (NASDAQ:NVDA) has highlighted that it has ramped up the massive-scale production of Blackwell AI supercomputers. Furthermore, AI continues to advance at light speed, with agentic AI and physical AI setting the stage for the next wave to revolutionize the largest industries.
For Q1 2026, NVIDIA Corporation (NASDAQ:NVDA) expects revenues of $43.0 billion, plus or minus 2%. Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is a fabless semiconductor company specializing in compute and networking systems for accelerated computing and AI. Shares increased 10.6% for the quarter and were up 170.3% in 2024, on strong quarterly results, with record data center revenue, which surpassed $30 billion, driven by demand for its Hopper GPUs, while Gaming and Automotive also beat expectations. Key investor debates include the continued progress on improving the capability of AI models (e.g. scaling laws – see more in the outlook section below), transition from AI training to inference and the potential impact on competitive dynamics, and the pace of adoption of AI across industries. Despite near-term uncertainties, we maintain conviction in NVIDIA’s leadership in accelerated computing, driven by its ability to innovate and adapt to market shifts. With robust margins, a dominant data center presence, and a growing ecosystem across hardware and software, we believe NVIDIA is well positioned to capitalize on the structural growth in AI and high-performance computing.”
Overall, NVDA ranks 5th on our list of tech stocks with high upside potential. 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 time frame. 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.
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Disclosure: None. This article is originally published at Insider Monkey.