We recently compiled a list of the 10 Most Promising Future Stocks According to Analysts. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other Most Promising Future Stocks According to Analysts.
Rising Market Volatility
Volatility in the equity markets is poised to hit levels not seen for the better part of the year as investors battle a string of developments. The uncertainty around the upcoming US elections and the soaring geopolitical tensions in the Middle East are the latest headwinds sending shockwaves in the market.
A report by MarketWatch indicates that October could turn out to be a spooky month for equities as valuations appear overstretched, with major indices at all-time highs. Analysts are no longer ruling out the prospects of a market crash given that recession fears are rising even though inflation levels have dropped significantly, prompting the Federal Reserve to cut interest rates.
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While expectations are high that the US economy will achieve a soft landing on higher interest rates, leading to lower inflation without causing a major hit to the economy, Michael Darda, chief economist and macro strategist at Roth Capital Partners, is sounding warning bells.
The economist maintains we are marching on ice that’s a bit thinner, depicted by rising unemployment and elevated earnings expectations that triggered market routs in August and September.
“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
A slowdown in the US economy amid the high interest rate environment comes amid a highly charged election that threatens to rattle the stock market. While indices are at all-time highs at the back of one of the longest bull runs, the prospects of a deep pullback are growing as investors become more cautious ahead of the election.
While the US stocks have often rallied following a major US election, Former Goldman Sachs partner Abby Joseph Cohen believes things could turn around this time around.
“Historically when you go back many cycles you see that the US stock market does pretty well after a major election. There is a sigh of relief and also most people feel that their candidate has won. This year aim not convinced it is going to be a sigh of relief rally. In fact if anything I am quite concerned about what happens if there is agitation of any sort following the election because of uncertainty about results,” Cohen said.
Although there is a good chance that the US stock market will crash this time, many analysts are also saying that things might improve following a very bad September that also saw some premium stocks on the S&P 500 plummet and hit all-time lows.
AI-related firms continue to drive market gains, with the S&P 500 up 21% year-to-date. Howard Chan, CEO of Kurv Investment Management, highlighted the importance of monetizing AI initiatives, noting Meta’s share price surge due to strong sales growth.
Analysts are increasingly focusing on promising future stocks, particularly those in advanced technologies, which are expected to withstand short-term pressures and deliver long-term value. Investing in industry leaders with a competitive edge and a strong track record of revenue and earnings growth, combined with low interest rates, is seen as a strategy likely to yield significant returns. Despite market volatility, certain stocks continue to offer substantial opportunities and the potential to generate significant long term value.
Our Methodology
To make our list of the most promising future stocks to buy according to analysts, we made a list of 40 stocks with market capitalization greater than $10 billion, significant average analyst share price percentage upside, and an average rating of Buy or better. They were then ranked in ascending order based on analyst’s upside potential, and the most promising future stocks are as follows.
At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders as of Q2: 179
Analyst Upside as of October 10, 2024: 15.32%
NVIDIA Corporation (NASDAQ:NVDA) is arguably one of the most promising future stocks, according to analysts, given the role it is playing in artificial intelligence, which is only starting. With so many companies relying on its chips to power next-generation technologies and software, its growth metrics and long-term prospects remain intact.
Given that artificial intelligence adoption is still in the early stages, it affirms Nvidia’s long-term prospects as a leading player in the supply of much-needed chips for AI. Given that graphic processing units are preferred for their flexibility and adaptability in the evolving AI applications, it also affirms the company’s growth metrics.
NVIDIA Corporation (NASDAQ:NVDA) financial statements show the company’s explosive growth in recent years. Its net income over the last four reported quarters has exceeded $53 billion. That’s almost twice as much as the $26.9 billion it made in fiscal 2022, which concluded on January 30, 2022, before all the AI hoopla started. It made $9.8 billion in profit during that fiscal year.
The enormous demand for Nvidia’s data center graphics processing units (GPUs), which aid in the execution and training of AI algorithms, caused the company’s second-quarter revenue to soar 122% year over year to $30 billion.
The company’s bottom line is likewise strong, with operating income rising 174% yearly to $18.6 million. In 2025 and beyond, management anticipates introducing new AI hardware products built on the quicker and more effective Blackwell architecture will boost customer demand.
NVIDIA Corporation (NASDAQ:NVDA)’s revenue base is poised to receive a significant boost later in the year with the launch of the Blackwell cap line. Given that the chipset is already eliciting sand demand, according to Coo Jensen Huang, it underscores why Nvidia is a top growth stock.
Thanks to robust revenue and earnings growth, the stock is currently trading at a price-to-earnings multiple of 31, which is not high for a stock that has rallied by more than 26,000%. Analysts on Wall Street rate the stock as a buy with an average price target of $152.44, implying a 15.32% change from the last price of $132.19.
According to our Insider Monkey database, at the close of Q2 2024, 179 investors were bullish on NVIDIA Corporation (NASDAQ:NVDA), with total stakes amounting to $53.7 billion.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artificial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefited from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
Overall, NVDA ranks 9th on our list of 10 Most Promising Future Stocks According to Analysts. While we acknowledge the potential of 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, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
