1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
Cramer mentioned that he never really considered value when it came to tech. Instead, he focused on whether it offered a better solution. He explained that the price of products was primarily determined by one factor: how much the customer was willing to pay. According to him, customers appeared largely indifferent to cost when it came to technology. Talking about NVIDIA Corporation (NASDAQ:NVDA), he said:
“But now with NVIDIA, the largest company in the world, by the way, we’re seeing something wholly different. We’re seeing a company with a product that’s incredibly expensive on the one hand, but incredibly cheap on the other. If you’re a cloud service provider and you give NVIDIA forty Gs for a version of its latest and greatest chip of Blackwell, you can make five times that. Insanely expensive as a product, dirt cheap as an investment. We keep hearing that NVIDIA’s charging too much or the demand is topping out or the stock’s overvalued, but the proof is in the pudding.
And CEO Jensen Huang has repeatedly told me about this five-to-one ratio, profit to cost ratio. That’s not just talk, this quarter backed it up. NVIDIA reported a sizable top and bottom line beat, healthy guidance for the current quarter. Blackwell, that latest invention, full production, which was a huge worry going into earnings. Maybe that worry was contrived, ginned up, perhaps. Jensen says the demand for the current chips and anticipation for the new one, is ‘incredible.’
Of course, there’s sellers, grumpy, clueless people who keep hoping for another one-day gain of 20% like we had last year on earnings and they’re disappointed. I say let them sell…
The cloud service providers, Amazon, Google, Oracle, Microsoft, simply can’t resist buying these high-end chips. Not because they feel compelled to keep up with the competition, that was another bear canard, but because forty Gs for one of these is a bargain. I’m sick of the bears telling me there aren’t enough uses or that things are maxed out at NVIDIA. I say, do some darn homework. The so-called expensive Blackwell is about making money with your money. NVIDIA’s about value.”
NVIDIA (NASDAQ:NVDA) reported exceptional financial results for the third quarter, far exceeding expectations with $35.1 billion in sales, reflecting a significant 94% increase from the same period last year. The company’s data center segment played a central role in this impressive growth, contributing $30.8 billion, which marks a remarkable 112% year-over-year increase. A large portion of the revenue from this segment came from GPU sales, a key area of strength for the company.
In particular, the company’s Blackwell GPU line has seen robust demand. According to NVIDIA (NASDAQ:NVDA) CEO Jensen Huang, demand for Blackwell GPUs has been “staggering”. The company shipped 13,000 GPU samples to customers during the third quarter alone.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ: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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