5. NVIDIA Corp. (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corp. (NASDAQ:NVDA) offers essential GPUs and AI platforms that help develop and execute machine learning workloads. The company’s Compute & Networking segment encompasses the Data Center computing platforms and end-to-end networking platforms. It also includes the NVIDIA AI Enterprise and other software. The company also customizes agentic solutions to accelerate enterprise AI adoption.
Recently, the US introduced new AI Diffusion Rules that impact the global chip distribution. With this control, the spread of AI can be regulated. Despite this, Bank of America remains optimistic and reiterated a Buy rating on the company on March 28 with a $200 price target. This is mainly driven by the Blackwell system deployments by Large cloud service providers as their AI infrastructure demands expand. These CSPs include Azure, GCP, AWS, and OCI. Other applications for the company’s GPUs include GenAI and deep learning in consumer internet companies like Meta.
However, as larger tech companies try to make their own AI chips now, NVIDIA Corp.’s (NASDAQ:NVDA) market shares are threatened. It’s also facing increased competition with major tech players like Apple, Qualcomm, and AMD. For instance, the company heavily relies on the 3nm process nodes that Taiwan Semiconductor Manufacturing Company makes. These enable the production of smaller and more energy-efficient chips at NVIDIA Corp. (NASDAQ:NVDA).
Guinness Global Innovators is highly bullish on NVIDIA Corp. (NASDAQ:NVDA) due to its dominant AI chip market position. It stated the following in its Q4 2024 investor letter:
“For a second year running, NVIDIA Corporation (NASDAQ:NVDA) was the Fund’s top performing stock, delivering a stellar return of +177.7% over the year. Since the beginning of last year, Nvidia’s ‘Hopper’ GPUs have been at the centre of exploding demand for chips powerful and efficient enough to facilitate the energy intensive requirements of AI processes within datacentres. Initially possessing over 95% of market share in these types of chips, Nvidia have been quick to entrench their position as the technological leader in the space, launching the successor to the current ‘Hopper’ GPU in March, Blackwell, inhibiting the likes of AMD and Intel making meaningful inroads in taking share of the fast-growing market. Compared to the previous iteration (Hopper) which is continuing to fuel Nvidia’s extreme revenue growth, the Blackwell chip is twice as powerful for training AI models and has 5 times the capability when it comes to “inference” (the speed at which AI models respond to queries). Throughout the year, Nvidia’s financial performance has remained resilient. Quarterly revenues hit $35.1 billion in their most recent quarter, beating consensus expectations by 6% and representing a +94% year-over-year increase. Additionally, Nvidia’s data centre segment, driven by the Hopper (H100) chip, grew fivefold over the past year, underscoring the sustained demand for advanced AI infrastructure. The H100 chip, priced at around $40,000, continues to see significant adoption due to its ability to enhance AI model training efficiency while lowering overall costs. This growth is expected to continue as companies invest in upgrading existing data centres and building new ones, with Nvidia well-positioned to capture a significant share of the estimated $2 trillion market opportunity over the next five years. There have been some concerns over Blackwell production delays causing share price volatility however, Nvidia has recovered swiftly, driven by positive earnings results through the year and assurances from management regarding future supply. Additionally, the release of the H200 chip promises to extend Nvidia’s technological leadership, ensuring continued momentum into 2025. While Nvidia’s valuation remains a topic of debate, the stock is not at a significant premium to history, and it still appears reasonable given its dominant market position, innovative prowess, and exposure to long-term secular growth trends in AI, cloud computing, and data infrastructure. As a result, Nvidia remains well-positioned to deliver sustained outperformance over the long term, making it a cornerstone of growth-oriented portfolios.”
