1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA)’s dominance in the GPU market is expected to be sustained for a long time, aiding its growth prospects. The company is a leading producer of discrete graphics processing units for data centers, gaming, and AI workloads. Its GPUs are regarded as the gold standard for training AI models. It has incredible leverage and pricing power in AI hardware and software ecosystems. Morgan Stanley analyst Joseph Moore sees robust demand for inference chips. The analyst’s “Buy” rating is backed by NVIDIA Corporation (NASDAQ:NVDA)’s emphasis on AI-driven growth, together with strong demand for its GPUs.
As per the analyst, NVIDIA Corporation (NASDAQ:NVDA) continues to benefit from robust demand for its GPUs, mainly for inference workloads, despite worries related to the macro risks and supply chain challenges. The analyst further highlighted that with AI adoption growing globally, the demand for inference chips can fuel the company’s long-term growth. The company reported revenue for the Q4 2025 of $39.3 billion, reflecting a rise of 12% as compared to the previous quarter, and a rise of 78% YoY. The company successfully ramped up the massive-scale production of Blackwell AI supercomputers. For Q1 2026, NVIDIA Corporation (NASDAQ:NVDA) expects revenue of $43.0 billion, plus or minus 2%. Furthermore, it expects GAAP and non-GAAP gross margins to be 70.6% and 71.0%, respectively, plus or minus 50 bps.
Investment advisory firm Ithaka Group released Q1 2025 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is the undisputed leader in accelerated computing, with dominant market share in Graphics Processing Units (GPUs) powering AI workloads across data centers, edge devices, and emerging platforms. Its end-to-end ecosystem—from silicon to software (CUDA, networking, and AI frameworks)—creates high switching costs and a widening competitive moat. With secular demand for AI infrastructure still in its early innings, Nvidia stands to benefit from sustained topline growth and strong operating leverage. In early January, a little known Chinese AI company, DeepSeek, released its large language model (LLM), DeepSeek-R1, to an unexpecting world. This model was purportedly trained on very few high-end Nvidia chips and was highly efficient when compared to other leading models. This release set off a chain reaction where investors have had to grapple with the idea that the world may not need as many GPUs as previously thought, which hampered the Nvidia buy case and sent the P/E multiple down to its cheapest level in the past 5 years.”
While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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