We recently published a list of Top 10 Stocks to Watch as Investors Brace for Recession. In this article, we are going to take a look at where NVIDIA Corp (NASDAQ:NVDA) stands against other top stocks to watch as investors brace for recession.
Despite some optimism in the market after President Donald Trump’s indication of possible talks with China, Wall Street analysts are warning about recession risks due to the impending impact of tariffs and an overall decline in consumer sentiment.
Adam Parker, Trivariate Research CEO, said in a recent interview with CNBC that it’s “hard” to be bullish in this market because the impact of tariffs is yet to be reflected in companies’ earnings.
Parker thinks that in the coming days, earnings reports of many companies will begin to show that we are indeed facing an economic slowdown:
“You know there’s a difference between a growth scare and and then an actual growth slowdown I think in this case it is a growth slowdown I don’t know how much of it is yet and that’s where I think the challenge is but you can’t just say oh it’s an irrational growth scare that everyone has and it’s like an uncertain I think if you have a business with pricing power if you have a business that you know you can be okay. But there’s a lot of economically sensitive businesses we’re going to hear from next week and the week after if you think about how earning season typically unfolds where we may get guidance that isn’t quite as peachy as we’ve seen from you know the original guys in the banks and then some of the higher quality tech companies have reported.”
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NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
Doug Clinton, Intelligent Alpha founder and CEO, explained in a latest program on CNBC why NVIDIA Corp (NASDAQ:NVDA) remains his top AI pick. The analyst said that the demand for the company’s chips will remain strong.
“Nvidia is still our top AI pick. And I know that that is probably at this point exhausting to hear. The stock has not worked this year. It really hasn’t worked the last 6 months. But I think if you look at the bottom line, 21 times forward earnings, I think those earnings are pretty solid. We’ve derisked the China issue now with the H20 ban. And I don’t think that the hyperscalers, no matter what happens in the economy, are going to stop spending on Nvidia chips. So that is still the name that our models are sticking with.”
Answering a question about the potential impact of price declines of chips, the analyst said that the use cases for the AI technology will increase over time:
“This happens always in tech, right? Prices come down and the ability of whether it’s software or hardware improves over time. That’s the story of technology. But I think the other side of the AI bull market is really what is the consumer side, what is the enterprise side for demand for these products. And what we’re seeing over the last 3 months — and I don’t think this is being reflected in stocks at all — is that there is huge demand for these products. And I think it’sre increasing and even accelerating with the 03 model launched last week from Open AI. You have Grok from xAI. You have Gemini’s new model from Google. All three of them have said they have capacity constraints in terms of what they can serve to customers right now. I think the demand will be there to force more chip buying even if prices do come down.”
Alger Spectra Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. In our view, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption. During the quarter, shares detracted from performance due to several factors. In January 2025, investor concerns grew regarding the emergence of advanced AI models from China, reportedly developed at lower costs and with reduced computing requirements, raising doubts about Nvidia’s market dominance. Additionally, U.S. President Donald Trump’s announcement of new tariffs targeting industries increased worries about higher operational costs. Despite these headwinds, Nvidia reported robust fiscal fourth-quarter results, highlighted by significant revenue growth driven by its data center segment. On the earnings call, CEO Jensen Huang emphasized the increasing computational requirements of future AI models, noting, “The more computation, the more the model thinks, the smarter the answer,” and adding that future reasoning models could demand substantially more compute resources. We believe Nvidia’s leadership in scaling AI infrastructure—including advancements in inference and reasoning during inference—continues to drive adoption among enterprises and startups, ensuring sustained demand for its high performance chips and software solutions. As older-generation chips are repurposed and new clusters deployed, we see Nvidia as well-positioned to capitalize on rising computational needs across AI applications.”
Overall, NVDA ranks 2nd on our list of top stocks to watch as investors brace for recession. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that under the radar 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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Disclosure: None. This article is originally published at Insider Monkey.