We recently published a list of Top 10 Semiconductor Stocks to Buy Now. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other top semiconductor stocks to buy now.
The global semiconductor industry reported a collective revenue of $626 billion in 2024, an 18.1% increase YoY, as per Gartner. Data centers accounted for the second largest sector for semiconductors, behind Smartphones, with revenues in this sector nearly doubling from $64.8 billion in 2023 to $112 billion in 2024. The International Data Corporation estimated that global demand for semiconductors will grow by 15% in 2025.
The U.S. semiconductor sector is a critical component of the global technology landscape, and its performance has significant implications for the broader economy. In recent years, the industry has experienced both growth and challenges, shaped by several factors. According to analysts, the growth is driven by the increasing reliance on technology in various sectors, including consumer electronics, automotive, healthcare, and artificial intelligence.
The industry has been at the forefront of technological innovation, with companies investing heavily in research and development. This has led to the development of more advanced chips, such as those using smaller process nodes and new materials, enabling greater performance and efficiency. The rapid pace of technological innovation continues to drive demand for more advanced semiconductors. As mentioned earlier, the rise of artificial intelligence (AI) and other emerging technologies is particularly important as these applications require high-performance chips that US companies are well-positioned to provide.
The semiconductor industry is highly competitive, with companies from other countries, particularly in Asia, posing a significant challenge to U.S. companies. This competitive environment has led to increased pressure on pricing and a further need for innovation to maintain a competitive edge. The industry is increasingly affected by geopolitical tensions, particularly between the U.S. and China. The ongoing trade tensions between the US and China have created uncertainty and challenges for the semiconductor industry. These tensions have led to restrictions on trade and investment, which can disrupt supply chains and limit market access for US companies. However, they have also spurred efforts to diversify supply chains and increase domestic production, which could benefit the US semiconductor sector in the long run.
The U.S. government has recognized the strategic importance of the semiconductor industry and has taken steps to support its growth. The CHIPS and Science Act of 2022, which provides significant funding for domestic semiconductor manufacturing and research, is a prime example of this support.
The overall health of the global economy also plays a role in the performance of the semiconductor sector. Economic downturns can lead to decreased demand for electronic devices, which in turn reduces demand for semiconductors. Conversely, periods of economic growth can boost demand for semiconductors and create opportunities for US companies. With the election of President Donald Trump into the Oval Office, analysts are confident that the tech sector will continue to show improved performance.
Our Methodology
For this list, we identified the 10 semiconductor stocks which have the highest upside potential using 12-month consensus price target. Then we merged these stocks with Insider Monkey’s Q4 2024 proprietary hedge fund holdings database and identified the 10 most popular hedge fund semiconductor stocks. The stocks are ranked in ascending order of their hedge fund positions.
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)
No. Of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computer, and networking solutions, including GPUs, software, and platforms for gaming, data-centers, automotive, and AI.
Morgan Stanley reiterated its Top Pick rating for Nvidia, viewing the DeepSeek selloff as a buying opportunity, leading to the share price rising by 2% on Thursday last week. Analysts led by Mr. Joseph Moore acknowledge headwinds in the long-term, but the short-term business outlook remains firm. The company reported revenue of $39.3 billion during the Q4 2024 earnings call.
NVIDIA Corporation (NASDAQ:NVDA) hardware-software integration, particularly its DGX cloud offerings, makes it a major player in AI and serverless computing. The company’s CEO also stated an improvement in their product performance by millions of times over the past decade, and expects similar growth over the next decade. While having an established dominance in hardware, it also has an overwhelming presence in the cloud. With 93% of GPU-accelerated instances being powered by the company’s hardware.
The Semiconductor Industry Association (SIA) which includes NVIDIA Corporation (NASDAQ:NVDA) as a member, spoke about the importance of the US Trade Commission to look beyond tariffs and work with global allies to offset China’s attempts at dominating the industry.
“In semiconductors, as in other advanced technologies, China has pursued a wide range of policies and practices that seek to frustrate access for foreign products and companies to its domestic market, while offering an array of subsidies, discriminatory standards, preferential government procurement policies, local content requirements, and other measures intended to boost local producers and design-in domestically produced semiconductor chips into downstream products for sale in China’s domestic market as well as for products exported to the rest of the world.”
At the time of writing this article, NVIDIA Corporation’s (NASDAQ:NVDA) share price was $112.69, with a consensus on the average price for the trading 12-months at $172.22, an upside of 52.83%.
Overall, NVDA ranks 1st on our list of top semiconductor stocks to buy now. While we acknowledge the potential for 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 time frame. If you are looking for an AI stock that delivers higher returns than NVDA, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
