1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hegde Fund Investors: 179
Jim Cramer discussed NVIDIA Corporation (NASDAQ:NVDA)’s dominant position in the market, comparing it to a king with the rest of the market’s stocks as its pawns. He expressed concerns about the pressure on NVIDIA Corporation (NASDAQ:NVDA), questioning whether it can maintain its leading role without experiencing significant setbacks. Cramer noted that, based on Larry Williams’ analysis, NVIDIA Corporation (NASDAQ:NVDA) might face a peak and subsequent decline in the near term.
Cramer highlighted that NVIDIA Corporation (NASDAQ:NVDA)’s current chart suggests a peak might occur next week, potentially leading to a sell-off that could extend through mid to late October. He acknowledged that while he hopes Larry’s prediction is wrong, the analysis provides a valid basis for considering a possible downturn, especially if NVIDIA Corporation (NASDAQ:NVDA)’s future outlook does not meet expectations.
“I almost feel like you can guess it—it’s Nvidia. It’s the king, and the rest of the market is made up of its pawns, marching to Nvidia’s drum. Remember this morning when I was on the call and said, “Look, Nvidia is almost too important. There’s too much pressure on Nvidia—can it sustain it? I don’t want Nvidia to be Samson.”
Take a look at this daily chart of Nvidia, going back to February. By the way, Larry, who advised selling Nvidia just before it peaked in the spring, predicted the stock would rise again in late May. Larry and his video calls have closely tracked the stock’s short-term cycle in red, which has followed the share price surprisingly well.
Unfortunately, the short-term cycle now projects that Nvidia should peak sometime next week, leading to a sell-off that may extend through mid to late October. Nvidia reports next week, and the long-term cycle indicates a bottom around the same time. Given that Larry sees Nvidia as the lynchpin of the market, it makes sense that the cycle forecast predicts a downturn for Nvidia, aligning with expectations for the S&P 500.
Yes, Nvidia is that influential. The chart interpreted by Larry Williams suggests that we might experience some pain as August ends, which could continue through mid to late October. I hope he’s wrong this time, but it’s wise to consider his analysis seriously. For my money, there’s a good chance he could be right, especially if Nvidia’s outlook isn’t strong.”
In the second quarter of 2024, NVIDIA Corporation (NASDAQ:NVDA) achieved revenue of $13.5 billion, a 20% increase from the previous year, and earnings per share (EPS) of $3.08, surpassing analysts’ expectations by 10%. This solid performance highlights the company’s effective growth strategy. A key driver of NVIDIA Corporation (NASDAQ:NVDA)’s positive outlook is its leading role in the artificial intelligence (AI) sector.
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs, including the A100 and H100 series, are critical for AI training and inference, positioning NVIDIA as a major player in the AI industry. Additionally, NVIDIA Corporation (NASDAQ:NVDA)’s data center business, which generated $8.5 billion in Q2 2024, has grown significantly due to the rising demand for AI and machine learning technologies.
NVIDIA Corporation (NASDAQ:NVDA)’s market position is further strengthened by strategic partnerships with top tech companies such as Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG), boosting its market reach and growth opportunities. The acquisition of Mellanox Technologies also enhances its data center capabilities, setting up the company for continued expansion. With the global semiconductor market expected to grow at a compound annual growth rate (CAGR) of 6.6% through 2028, driven by AI and data center needs, NVIDIA Corporation (NASDAQ:NVDA) is well-positioned to benefit from these trends.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), our conviction lies in the belief that under the radar 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.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
