Baron Funds, an investment management company, released its “Baron Opportunity Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund rose 4.35% (Institutional Shares), lagged the Russell 3000 Growth Index, which gained 7.80%, and essentially matched the S&P 500 Index, which advanced 4.28%. In the first half of 2024, the fund posted solid gains, rising 20.44% compared to a 19.90% return for the Russell 3000 Growth Index and beating the S&P 500 Index’s 15.29% gain. After a slow start to the quarter, U.S. stocks increased steadily in May and June. Increased worries about inflation, the pace of expected rate cuts by the Federal Reserve, and growing geopolitical tensions in the Middle East were blamed for the early market weakness. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Baron Opportunity Fund highlighted stocks like NVIDIA Corporation (NASDAQ:NVDA), in the second quarter 2024 investor letter. NVIDIA Corporation (NASDAQ:NVDA) offers graphics and compute and networking solutions. The one-month return of NVIDIA Corporation (NASDAQ:NVDA) was 11.38%, and its shares gained 170.08% of their value over the last 52 weeks. On August 20, 2024, NVIDIA Corporation (NASDAQ:NVDA) stock closed at $127.25 per share with a market capitalization of $3.13 trillion.
Baron Opportunity Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) sells semiconductors, systems, and software for accelerated computing, gaming, and generative AI. NVIDIA’s stock continued its run, rising 36.9% in the second quarter and finishing the first half of 2024 up 149.9%. NVIDIA continued to report unprecedented growth at scale, with quarterly revenues of $26 billion growing 262% year-over- year, datacenter segment revenues of $22.6 billion up 427% year-on-year, and operating margins of 69.3%. NVIDIA’s growth is even more impressive as it is nearing a new product cycle with Blackwell going into production in the third quarter, which speaks to the urgency of demand for GPUs as customers are not willing to wait for the next generation architecture despite its improved performance-to-cost ratio. The Blackwell architecture, and in particular, the new GB200 NVL72/36 racks, which the company believes would become “the new unit of compute,” would in our view:
(1) increase the company’s content per server (for example an NVL72 rack would have 18 compute trays with 4 Blackwell GPUs and 2 Grace CPU in each, and 9 switch trays with NVIDIA content); and (2) further strengthen its competitive advantages as the demand for datacenter-scale computing grows due to scaling laws (models become more capable with size and as they are trained on more data), new model types (such as Mixture of Experts that increase the demand on sharing of data between GPUs) and model optimization mechanisms (such as tensor parallelism, pipeline parallelism, and expert parallelism – which also increase the demands from the connectivity layer), and increase the relative importance of NVIDIA’s networking and full-system capabilities (in particular the capabilities enabled with the latest generation of NVLink–connecting up to 576 GPUs together, up from 8)…” (Click here to read the full text)
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA) is in 5th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 179 hedge fund portfolios held NVIDIA Corporation (NASDAQ:NVDA) at the end of the second quarter which was 186 in the previous quarter. NVIDIA Corporation (NASDAQ:NVDA) reported another record quarter in Q1 with $26 billion in revenues, representing a 262% year-over-year increase. 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed NVIDIA Corporation (NASDAQ:NVDA) and shared the latest AI news and analyst ratings you should not miss. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
