We recently published a list of Top 10 AI Stocks for H2 2024. Given that NVIDIA Corporation (NASDAQ:NVDA) ranks second on the list, it deserves a closer look.
In a recent note, Wedbush Securities said that ultra-large-cap tech stocks have a 15% upside in the second half of 2024, driven by AI. Wedbush analyst Dan Ives, who has been beating the AI drum and believes the AI “party” is just getting started, wrote that the $4 trillion AI arms race is unfolding among the major tech players and that GPU chips have become the new oil or gold of the tech industry.
Ives wrote that he believes the NASDAQ will have another strong second half of the year.
“We expect tech stocks to rise 15% by the end of 2024, with tech fundamentals expected to accelerate as AI use cases multiply.”
While Ives continues to see major tech stocks leading the AI market, he believes the AI-led rally can broaden to tech companies that have strong “install” bases and can actually use generative AI applications and models.
Last month, in an interview on CNBC, Ives said the tech bull market would last at least two more years. When asked what the threat to that bull run might be, Ives said China could be a threat in a potential “tech cold war,” but that he believed it was a “contained threat.”
“It started with semiconductors, but now the demand and use cases are starting to expand to other companies. Ives called the rise of AI the “fourth industrial revolution.”
We picked the best AI stocks in Wedbush’s latest note. The firm named some of these stocks as top picks for the second half of 2024, while others called tech stocks “oversold.” For each stock, we listed the number of hedge fund investors. Why are we interested in the stocks that hedge funds are piling into? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
NVIDIA Corp Inc (NASDAQ:NVDA)
Number of hedge fund investors: 186
Dan Ives is one of the biggest bulls on NVDA. Recently, in response to Newstreet Research’s downgrade of NVDA, Ives tweeted:
“We couldn’t disagree more with this negative call from Nvidia as discussed on @LastCallCNBC last night, as the AI revolution is just beginning in our opinion, led by Nvidia and AI Godfather Jensen at this 9pm party.”
Wall Street analysts are quick to point to NVIDIA Corp (NASDAQ:NVDA) as a frontrunner in the AI race. Oppenheimer’s Rick Schafer recently joined the NVIDIA Corp (NASDAQ:NVDA) chorus, raising the chipmaker’s price target to $150 from $110 after the stock split 10-for-1.
NVIDIA Corp (NASDAQ:NVDA) is one of the stocks that is making up a significant portion of the market’s total return, thanks to its AI-powered rally that shows no end in sight. Shares of NVIDIA Corp (NASDAQ:NVDA) have gained about 206% over the past year.
Barclays’ Tom O’Malley recently offered some bullish comments on the stock, with a $145 price target and an Overweight rating. The analyst highlighted a potential $25 billion opportunity for countries that build AI capabilities. O’Malley expects NVIDIA Corp (NASDAQ:NVDA) to report earnings of $3.62 per share for fiscal 2026, while Wall Street analysts on average have an estimate of $3.55 per share for NVIDIA Corp (NASDAQ:NVDA)’s 2026 earnings.
NVIDIA Corp’s (NASDAQ:NVDA) latest product announcements and plans unveiled at Computex 2024 show that NVIDIA Corp (NASDAQ:NVDA) has a lot more to offer to fuel its growth engine. Analysts like NVIDIA Corp’s (NASDAQ:NVDA) move to a new AI architecture known as Rubin (R100) and believe its powerful H100 and Blackwell chips easily beat its competitors.
NVIDIA Corp (NASDAQ:NVDA) will begin shipping the H200 in the second half of this year. At its GTC conference, NVIDIA Corp (NASDAQ:NVDA) unveiled three accelerators: B200, GB200, and GB200 NVL72. All of these products are growth catalysts for NVIDIA Corp (NASDAQ:NVDA) stock and justify its price-to-earnings multiple of 71, given NVIDIA Corp (NASDAQ:NVDA)’s forecast growth of over 100% this year and 32% next year. Based on Wall Street’s 2026 EPS estimate, NVIDIA Corp (NASDAQ:NVDA) is trading at a forward price-to-earnings multiple of 35.74, making the stock attractively valued given the growth catalysts it has.
Meridian Hedged Equity Fund said the following about NVIDIA Corporation (NASDAQ: NVDA) in its Q1 2024 investor letter:
“NVIDIA Corporation Nvidia Corp. (NASDAQ: NVDA) is a leading developer of graphics processing units (GPUs) for the gaming and professional markets, as well as system-on-chip units for the mobile computing and automotive markets. The company has recently seen strong performance driven by strong demand for its data center products, particularly those related to artificial intelligence. A key driver of Nvidia’s recent success has been the growing adoption of its GPU accelerators for AI training and inference across a variety of end markets. The company’s GPUs have become an industry standard for training large language models (LLMs), and its networking solutions, such as NVLink and InfiniBand, are critical to maximizing the performance of AI systems. Nvidia’s latest Blackwell GPU platform is expected to further extend its lead in the AI accelerator market, with significant performance and total cost of ownership advantages over its predecessors. As the AI market continues to expand with increasing adoption in enterprises and sovereign nations, we expect Nvidia to maintain its dominance and see sustained growth in its data center business. Beyond data center, Nvidia also benefited from strong demand in its gaming business, which recovered after a period of inventory digestion in 2022. The company’s gaming GPUs were well-received and its focus on the high-end market supported average selling price growth. Going forward, we expect the gaming market to remain healthy with continued growth potential. Nvidia also sees opportunities to diversify its business and foray into new markets, such as automotive and robotics. We continued to maintain our position in Nvidia.”
Overall, NVIDIA Corporation (NASDAQ:NVDA) ranks 2nd on Insider Monkey’s list of Top 10 AI Stocks for H2 2024. While we recognize the potential of NVIDIA Corporation (NASDAQ:NVDA), we believe that under-the-radar AI stocks have more promise to deliver higher returns, and in a shorter time frame. If you’re looking for an AI stock that’s more promising than NVDA but trades at less than 5x earnings, check out our report on the company. the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.