We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
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A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) operates as a technology company. It is engaged in developing a platform for scientific computing, AI, data science, autonomous vehicles, and robotics, and focuses on PC graphics.
The company’s intangible assets associated with its graphics processing units and increased switching costs concerning its proprietary software are expected to act as principal growth enablers. NVIDIA Corporation (NASDAQ:NVDA)’s roots revolve around gaming, and the company’s patents related to hardware design helped it achieve market leading position in gaming GPUs. As a result of this dominant position, the company was able to build economies of scale and invest in R&D efforts.
Spectrum-X Ethernet for Al and NVIDIA Al Enterprise software are the new product categories that are achieving significant scale. This demonstrates that NVIDIA Corporation (NASDAQ:NVDA) is a full-stack and data center-scale platform.
NVIDIA Corporation (NASDAQ:NVDA)’s advanced intellectual property has created significant barriers to entry, which was evident when Intel decided to license IP from this tech giant. Notably, the data centers remain critical to power Al systems which can perform difficult tasks, such as speech recognition and photo recognition. Therefore, NVIDIA Corporation (NASDAQ:NVDA) continues to focus on leveraging its GPU prowess in emerging areas like data centers and automotive.
Wall Street analysts believe that a new class of products, data processing units (DPUs), can handle certain tasks. This will allow CPUs to focus on core applications. These analysts anticipate that DPUs will become commonplace in all servers.
For 3Q 2025, the company’s revenue is expected to be $32.5 billion, plus or minus 2% and GAAP and non-GAAP gross margins should be in the range of 74.4% and 75.0%. In 2Q 2025, the company saw record quarterly revenue of $30.0 billion, exhibiting a rise of 15% from 1Q 2025 and 122% YoY. The revenues were supported by global data centers, which continue to focus on modernizing the entire computing stack with accelerated computing and generative Al.
UBS Group upped their price objective on the shares of NVIDIA Corporation (NASDAQ:NVDA) from $120.00 to $150.00. They gave a “Buy” rating on 8th July.
Fred Alger Management, an investment management company, released its second quarter 2024 investor letter and mentioned NVIDIA Corporation (NASDAQ:NVDA). Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption, in our view. During the quarter, the company reported better-than-expected fiscal first quarter results driven by strong demand from data centers. Additionally, management noted that large cloud service providers, contributing approximately 45% of data center sales, recognize the high return on investment offered by Nvidia’s computing solutions, which are driving AI spending. The company also introduced its next-generation H200 chip, which nearly doubles the inference performance compared to the H100 chip, enhancing how trained AI models process new data. Lastly, management raised their fiscal second quarter guidance, noting that demand for their current H100 chips remains strong, and that demand for their next generation products is estimated to outstrip supply over the next year. We continue to believe the company is well positioned to potentially benefit from the growing AI data center workloads, which are driving demand for the increased interconnections and fully accelerated software stacks, thereby enabling leading application performance and fast result times.”
Overall NVDA ranks 1st on our list of stocks that will go to the moon. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
