2. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Doug Clinton, Intelligent Alpha founder and CEO, explained in a latest program on CNBC why NVIDIA Corp (NASDAQ:NVDA) remains his top AI pick. The analyst said that the demand for the company’s chips will remain strong.
“Nvidia is still our top AI pick. And I know that that is probably at this point exhausting to hear. The stock has not worked this year. It really hasn’t worked the last 6 months. But I think if you look at the bottom line, 21 times forward earnings, I think those earnings are pretty solid. We’ve derisked the China issue now with the H20 ban. And I don’t think that the hyperscalers, no matter what happens in the economy, are going to stop spending on Nvidia chips. So that is still the name that our models are sticking with.”
Answering a question about the potential impact of price declines of chips, the analyst said that the use cases for the AI technology will increase over time:
“This happens always in tech, right? Prices come down and the ability of whether it’s software or hardware improves over time. That’s the story of technology. But I think the other side of the AI bull market is really what is the consumer side, what is the enterprise side for demand for these products. And what we’re seeing over the last 3 months — and I don’t think this is being reflected in stocks at all — is that there is huge demand for these products. And I think it’sre increasing and even accelerating with the 03 model launched last week from Open AI. You have Grok from xAI. You have Gemini’s new model from Google. All three of them have said they have capacity constraints in terms of what they can serve to customers right now. I think the demand will be there to force more chip buying even if prices do come down.”
Alger Spectra Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:
“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. In our view, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption. During the quarter, shares detracted from performance due to several factors. In January 2025, investor concerns grew regarding the emergence of advanced AI models from China, reportedly developed at lower costs and with reduced computing requirements, raising doubts about Nvidia’s market dominance. Additionally, U.S. President Donald Trump’s announcement of new tariffs targeting industries increased worries about higher operational costs. Despite these headwinds, Nvidia reported robust fiscal fourth-quarter results, highlighted by significant revenue growth driven by its data center segment. On the earnings call, CEO Jensen Huang emphasized the increasing computational requirements of future AI models, noting, “The more computation, the more the model thinks, the smarter the answer,” and adding that future reasoning models could demand substantially more compute resources. We believe Nvidia’s leadership in scaling AI infrastructure—including advancements in inference and reasoning during inference—continues to drive adoption among enterprises and startups, ensuring sustained demand for its high performance chips and software solutions. As older-generation chips are repurposed and new clusters deployed, we see Nvidia as well-positioned to capitalize on rising computational needs across AI applications.”
