1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Funds Investors: 193
Jim Cramer said in a latest program on CNBC that investors were expecting a bump in NVIDIA Corp (NASDAQ:NVDA) shares when the GTC started, but the stock actually fell.
“You’d expect some sort of impact on the stock market or at least in the stock of Nvidia but that sure didn’t happen today. We learn that nothing’s more powerful than multiple compression as Nvidia stock actually slid $410. It declined 3.4%. I say, ouch. Okay, I can see a bear case here although I don’t share. My charitable trust is a big position stock and Nvidia stock isn’t cheap unless everything goes right, and in this climate of fear environment, it’s hard to see everything go on right even for a company that is this special. And oh my, after watching today’s keynote, it always reminds you how special it really is. Just because 17,500 people get together to listen to Jensen Huang, that doesn’t mean you’re going to get higher stock prices. Sometimes the tape is simply against you. End of story.”
The market will keep punishing Nvidia for not coming up to its gigantic (and sometimes unrealistic) growth expectations. About 50% of the company’s revenue comes from large cloud providers, which are rethinking their plans amid the DeepSeek launch and looking for low-cost chips. Nvidia’s Q1 guidance shows a 9.4% QoQ revenue growth, down from the previous 12% QoQ growth. Its adjusted margin is expected to be down substantially as well to 71%. The market does not like it when Nvidia fails to post a strong quarterly beat. The stock will remain under pressure in the coming quarters when the company will report unimpressive growth.
Nvidia is facing challenges at several levels. Competition is one of them. Major competitors like Apple, Qualcomm, and AMD are vying for TSMC’s 3nm capacity, which could limit Nvidia’s access to these chips. Why? Because Nvidia also uses TSMC’s 3nm process nodes. Nvidia is also facing direct competition from other giants that are deciding to make their own chips. Amazon, with its Trainium2 AI chips, offer alternatives. Trainium2 chips could provide cost savings and superior computational power, which could shift AI workloads away from Nvidia’s offerings. Apple is reportedly working with Broadcom to develop an AI server processor. Intel is also trying hard to get back into the game with Jaguar Shores GPU, set to be produced on its 18A or 14A node.
Parnassus Growth Equity Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) continued to lead the market for graphics processing units and semiconductor chips needed to power AI applications. Because our position in the stock is an underweight relative to the nearly 12% of the benchmark it now represents, it was a relative detractor for the year.”
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), our conviction lies in the belief that 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 an 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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