We recently published a list of 10 AI Stocks That Will Skyrocket. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other AI stocks that will skyrocket.
Enterprise AI is expected to Drive Earnings in 2025
Some investors are heavily scrutinizing Big Tech’s AI spending. Despite these hefty expenditures, Big Tech has been enjoying solid revenues and earnings growth. Yung-Yu Ma, CIO at BMO Wealth Management, recently joined Yahoo Finance to shed light on the overall AI sector outlook heading into 2024.
Ma believes that companies are increasing their investments in AI in anticipation of higher returns. He said that it makes sense that the market is less likely to be enthusiastic about this situation. Ma argued that while spending on AI is likely to increase, there is a certainty that the results will soon show, maybe by the end of 2025.
He added that the market will probably see healthy earnings growth in 2025. Spending is broadly going to drive these earnings, particularly AI and its different use cases such as data centers, electricity grids, and other infrastructure. He expects an overall growth in valuation and shared that Big Tech is extremely confident and committed to pouring investment into the sector.
A Glance at Some Revolutionary AI Startups
2024 has been quite a year for artificial intelligence. Existing startups like Anthropic and Databricks have been performing exceptionally well and transforming the industry.
Anthropic is an AI safety and research company behind the OpenAI rival, Claude. On November 24, Anthropic extended its partnership with AWS, involving another $4 billion investment, bringing the total to $8 billion. The partnership also positions AWS as Anthropic’s primary cloud and training partner. Keeping up with the partnership, on December 4, Anthropic began optimizing Claude models to be able to run on AWS Trainium 2.
Databricks, the data and AI company, is another AI startup crucial to the AI revolution. Some of the products by Databricks include data management solutions, data warehousing, real-time analytics, data sharing, and data governance. The company is expanding to new heights. On November 6, the company partnered with KT Corporation to boost data and AI innovation in Korea. Following the trend, on November 20, Databricks announced it saw 70% annualized growth in its French business and has launched a new office in central Paris.
Our Methodology
To come up with AI stocks that will skyrocket, we consulted media reports to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of December 3, 2024. Our list is in ascending order of the street high upside as of December 3, 2024. We have also mentioned the hedge fund sentiment for each stock.
Why are we interested in 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).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Street High Upside as of December 3, 2024: 59%
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is a leading GPU maker driving innovation in artificial intelligence, gaming, creative design, autonomous vehicles, and robotics. There is no doubt about NVIDIA’s position in the technology and AI sector. In the third quarter of 2024, the company generated revenue worth $35.1 billion, up by 17% sequentially and 94% year-over-year. Most of the demand was propelled by the growing AI needs of the market.
On November 6, the company established a partnership with Hugging Face to fuel research and development in open-source AI robotics. More recently, on December 3, NVIDIA Corporation (NASDAQ:NVDA) enhanced physical AI to allow for advancements in robotics simulation in AWS and accelerated AI model training. On the same day, the company announced that its Cloud AI computing platform is available in AWS, fueling advancements in enterprise development. Overall, NVIDIA Corporation (NASDAQ:NVDA) is an important stakeholder in the AI industry explaining why 193 hedge funds were bullish on the stock at the close of Q3 2024.
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, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted 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 4th on our list of AI stocks that will skyrocket. While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
