We recently published a list of 12 Top AI Stocks Leading the ‘Big Tech Race’ to $4 Trillion According to Famous Wall Street Analyst. Since NVIDIA Corp (NASDAQ:NVDA) ranks 4th on the list, it deserves a closer look.
Wedbush Securities analyst Dan Ives said in a new note that major tech giants are now in a “race” to capture the $4 trillion AI market, calling GPUs a new “oil” or “gold” in the technology sector. Ives said the AI “party” is just getting started and the clock says “9 p.m. in a party that will last until 4 a.m. with the rest of the tech world joining in now. Ives believes that spending on GPUs and data centers is “the only possible solution.” Ives believes the “first wave” of AI benefited the big tech giants leading the AI race, with the second, third and fourth “spinoffs” starting to trickle down to other companies .
At another investing event, Ives recently predicted that the AI-led bull run could last another two to three years, saying that in a year’s time, investors would be looking at a market cap of $3 trillion to $4 trillion. dollars for big tech companies.
“The tech bull market is just beginning,” Ives was quoted as saying.
In his latest note, Ives highlighted several stocks that he believes could benefit from the AI revolution. In this article, we take an in-depth look at these stocks, discuss their AI-related growth catalysts, and see whether or not they are wise long-term investments. For each stock, we mentioned hedge fund sentiment. Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by 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 (NASDAQ:NVDA)
Number of hedge fund investors: 186
Wedbush’s Dan Ives thinks it’s just “9 p.m.” in the “AI party” expected to last until “4 a.m.” and it’s all about Nvidia Corp’s (NASDAQ: NVDA) GPUs , as the analyst believes the “only game in town for GPUs intended to run generative AI applications all run through Nvidia.”
UBS believes that Nvidia Corp (NASDAQ:NVDA) is well-positioned to benefit from the $331 billion market opportunity in the AI enablement layer, driven by its GPUs. In the Cloud Enabling Layer segment, UBS believes Nvidia Corp’s (NASDAQ: NVDA) DGX offering makes the company a promising player. Nvidia Corp (NASDAQ: NVDA) DGX Cloud is a supercomputing service that gives businesses access to the software and infrastructure needed to train advanced generative AI models. It is a combination of servers and workstations for powering deep learning applications through the use of general-purpose computing on graphics processing units (GPGPUs).
On the Intelligence and Application layer of the AI value chain, UBS sees no notable catalysts for Nvidia Corp (NASDAQ: NVDA).
NVIDIA Corp’s (NASDAQ: NVDA) latest product announcements and plans revealed at Computex 2024 show that NVIDIA Corp (NASDAQ: NVDA) has much more in its arsenal to fuel its growth engine. Analysts like NVIDIA Corp (NASDAQ:NVDA) are looking to a new AI architecture known as Rubin (R100) and believe its powerful H100 and Blackwell chips easily beat 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 are growth catalysts for NVIDIA Corp (NASDAQ: NVDA) stock and justify its P/E multiple of 71, given NVIDIA Corp (NASDAQ: NVDA) growth expectations of over 100% this year and by 32% next year. Based on Wall Street’s 2026 EPS estimate, NVIDIA Corp (NASDAQ:NVDA) is trading at a forward P/E multiple of 35.74, making the stock’s valuation attractive considering the catalysts growth available to it.
RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2024 Investor Letter:
“NVIDIA Company (NASDAQ:NVDA): NVDA stock was our biggest contributor during the quarter after stellar Q4 results and Q1 guidance driven by strong data center sales. The company reported quarterly revenue of $22.1 billion, up 265% year-over-year, and EPS for the quarter of $5.16, up 487% year-over-year and 12 % higher than expectations. First-quarter revenue guidance of $24 billion was 8% above very high expectations. The artificial intelligence arms race started by ChatGPT and Alphabet’s Bard, among others, has generated huge demand for Nvidia’s next-generation graphics processors.
NVDA is the leading designer of graphics processing units (GPUs) needed for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation, growing from a primarily gaming-focused chip supplier to one of the largest semiconductor/software suppliers in the world. world. Over the past decade, the company has grown its revenue at a compound annual rate of more than 20%, while increasing its operating margins and, through its asset-light business model, generating cash flow. ever-increasing available cash flow. Following the recent results, Jensen Huang, founder and CEO of NVIDIA said in the company’s press release: “One trillion dollars of installed global data center infrastructure will move from general purpose to accelerated computing as businesses race to apply generative AI in every product, service and business process.”
Overall, NVIDIA Corp (NASDAQ: NVDA) ranks 4th on Insider Monkey’s list titled 12 Top AI Stocks Leading the ‘Big Tech Race’ to $4 Trillion According to Famous Wall Street Analyst. While we recognize the potential of NVIDIA Corp (NASDAQ:NVDA), our conviction lies in the belief that AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than NVIDIA Corp (NASDAQ:NVDA) but is trading at less than 5x earnings, check out our report on cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.