1. NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation (NASDAQ:NVDA) was one of the stocks on Jim Cramer’s radar as he highlighted that semiconductor and AI infrastructure stocks are currently in charge. Cramer was bullish on the company and its recently reported quarter as he said:
… We talk hardware, the biggest part of that is the company just reported tonight that seems to not be able to get out of its own way right now, which is NVIDIA. Now, I’ve been pounding the table on NVIDIA since it was trading at a split-adjusted price of just under four bucks. I’ve never hidden my belief in the company and its team led by Jensen Huang. NVIDIA just reported after the close, delivering another steady set of numbers, revenue growing 85% year over year, $81.6 billion, beating expectations by nearly $3 billion. Most of the growth came from the company’s core data center business, with hyperscale revenues up 115% versus the prior year and up sequentially, while AI cloud, industrial, and enterprise revenue grew 74% from the prior year. The company’s gross margins were in line. Oh, maybe people don’t like that. And NVIDIA had an 11-cent bottom line beat off a $1.76 basis. Free cash flow came in $10 billion above expectations.
Now, we’re at the point where NVIDIA has to look hard for places to put all of its money it’s making. Every week, the company seems to be… taking stakes in small component players, a new hyperscaler, perhaps optical. But after buying back nearly $20 billion of stock in the current quarter, NVIDIA announced a new $80 billion share repurchase program even as… close to $40 billion remaining on its previous authorization. Very bullish. The company’s outlook for the current quarter looked good, too. NVIDIA’s guiding for $91 billion in revenue this quarter, roughly $4 billion above the expectations that were $87 billion, despite the fact that the company’s still assuming no data center compute revenue from China.
It was almost exactly three years ago, in May 2023, that NVIDIA shocked Wall Street with roughly $4 billion of upside in its guide for the quarter ahead. That caused a huge gap up for the stock, which never really looked back after that. But now with the stock up over 600% since then, it’s tougher for the company to surprise investors. It’s gotten so big, the stock’s basically flattened in after-hours trading, which I think is more of a reflection on how everyone who wants NVIDIA already owns NVIDIA than anything qualitative about the company’s earnings. It’s hard to get bigger when you’re so huge at north of $5 trillion.
NVIDIA Corporation (NASDAQ:NVDA) develops accelerated computing and AI platforms, GPUs for gaming and professional use, cloud services, robotics and embedded systems, and automotive technologies.
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about the cheapest AI stock.
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