2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
NVIDIA Corporation (NASDAQ:NVDA) offers a compelling investment opportunity due to its leading role in the GPU market and its key position in artificial intelligence (AI) and machine learning. Jim Cramer shared a personal story about renaming his dog Everest after Nvidia in 2017 when the stock was just above $3. Over the next seven years, NVIDIA Corporation (NASDAQ:NVDA)’s stock surged by more than 3,000%.
“When I renamed my dog Everest after Nvidia back in 2017, at a time when the stock was $3 and change, who knew it would rally more than 3,000% over the next seven years? Many greeted my name change as a stunt, even as Everest, a rescue mutt who loved me dearly, beautifully answered to Nvidia whether I had a Blue Buffalo-filled steel cup or the more popular T-bone in my hand. That boy would eat anything, including Raisinets stolen from my backpack, which led to a midnight run to the vet…
No matter, my view is simple: Long-term, I believe in the use cases for Nvidia’s chips. I believe in the new industrial revolution as predicted by Jensen Huang, and that’s why I say, ‘Own it, don’t trade it.’ At the end of the day, I didn’t rename my pet after just any company.”
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs, such as the A100 and H100 Tensor Core models, are critical for advancements in AI, high-performance computing, and data centers. This leadership is evident in NVIDIA’s strong financial performance, with Q2 2024 revenue reaching $10.3 billion—a 25% increase from the previous year—driven by high demand in data centers and gaming.
The increasing need for cloud computing and data centers boosts NVIDIA Corporation (NASDAQ:NVDA)’s business, as its GPUs are essential for AI training and inference, and the company continues to secure large contracts with cloud providers. NVIDIA Corporation (NASDAQ:NVDA)’s investments in AI research, including platforms like CUDA and NVIDIA AI Enterprise, are yielding cutting-edge solutions used across various industries.
Additionally, the planned acquisition of ARM Holdings (pending regulatory approval) is expected to strengthen NVIDIA Corporation (NASDAQ:NVDA)’s technology portfolio and industry impact. NVIDIA Corporation (NASDAQ:NVDA)’s gaming sector remains robust, supported by strong demand for its GeForce RTX graphics cards and ongoing advancements in gaming technology.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
