Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

6. NVIDIA Corporation (NASDAQ:NVDA)

Consensus Long-Term EPS Growth Estimate: 30%

Number of Hedge Fund Holders: 179

NVIDIA Corporation (NASDAQ:NVDA) is the world-leading GPU designer whose products are powering the artificial intelligence industry. Since the release of ChatGPT to the public, NVIDIA Corporation (NASDAQ:NVDA)’s shares have gained 730%, making it clear that AI is baked into the firm’s hypothesis. The firm’s fortunes depend on its ability to not only design the best-performing chips but also to sustainably and predictably ship them in high volumes to customers while keeping margins high. Consequently, any turbulence on either the product design, shipping, or cost control fronts leads to tailwinds for NVIDIA Corporation (NASDAQ:NVDA)’s shares. Additionally, the high demand for its chips has meant that big tech is eager to find alternatives. The urgency for alternatives is also making companies design in-house AI chips, such as those from Amazon. As a result, unless NVIDIA Corporation (NASDAQ:NVDA) maintains its performance edge and logistics capabilities, the firm might see trouble in the future.

Polen Capital mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter. Here is what the fund said:

“In a reversal from the past two quarters, NVIDIA Corporation (NASDAQ:NVDA) represented our top relative contributor this quarter, despite the modest underperformance, declining -1.7%. In many ways, NVIDIA was a microcosm of the broader market’s heightened volatility. Beneath the placid surface, the company experienced a 27% drawdown followed by a +31% rally, only to repeat the cycle with a -21% drawdown followed by a subsequent 20% rally to finish the quarter. In our view, the stock’s volatility goes beyond fundamental business drivers, but the company in turn benefitted from increasing capital spending budgets from cloud service providers and large enterprises for generative AI (“GenAI”) infrastructure spending. Simultaneously, the stock endured weakness related to the delayed next-generation Blackwell chip, and an earnings forecast that exceeded expectations, albeit not as much as some investors hoped. While we continue to believe NVIDIA is a highly advantaged business, with significant demand for their chips and servers ahead of the need for that hardware from real-world businesses, we are cautious about its growth sustainability since it lacks recurring revenue.”