In this piece, we will take a look at Citigroup’s top 5 AI stocks to buy. For more stocks on this list, head on over to Citigroup’s Top 10 AI Stocks to Buy.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Investors in Q1 2023: 132
No other company has benefited from the AI Boom than NVIDIA Corporation (NASDAQ:NVDA). The company has more than doubled in value, with a market valuation powering through the $1 trillion milestone. The company is enjoying robust growth given that its chips are critical to training AI models and inferencing.
Its revenue is expected to surge by over 60% this year due to strong demand for GPUs, allowing companies to train AI models quickly. There is a long queue to buy the graphics that have proved effective and powerful.
As demand for generative AI software such as chatbots grows, the need for NVIDIA’s GPUs that enable such applications is expected to balloon over the next five years by over time. This explosion is why Nvidia has emerged as a solid AI play.
Insider Monkey found that 132 hedge funds invested in NVIDIA Corporation (NASDAQ:NVDA)’s shares after analyzing their Q1 2023 holdings. Out of these, the firm’s largest shareholder is Rajiv Jain’s GQG Partners with a $2.29 billion stake.
On July 10, Goldman Sachs raised price target on NVIDIA Corporation (NASDAQ:NVDA) to $495 and kept ‘Buy’ rating. Nvidia has been a leader and beneficiary of traditional AI, but now has a new growth phase from Generative AI, the analyst says. The firm increased its FY25 and FY26 revenue and non-GAAP EPS estimates by 8% and 22%, respectively.
Artisan Partners made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:
“Top contributors to performance for the quarter included graphics semiconductor company NVIDIA Corporation (NASDAQ:NVDA). Nvidia rose after reporting strong results and forecasting significantly higher data center revenues for the coming quarter, driven by rising artificial intelligence investments around the world.
When we are successful in achieving disproportionate equity outcomes, we need a process for managing them. Entering this year, we had a ~6.5% position in Nvidia. Due to the enthusiasm for generative AI and a rapid conclusion to “cloud optimization,” the stock has surged 189.5% this year including 52.31% in Q2. We retained an investment in Nvidia with less capital at risk, an approach which afforded us the potential to prudently participate in excellent investments over long periods of time. Notably, despite our gradual position reductions, Nvidia has contributed 1491bps to performance since inception. In turn, these value pathways form the foundation upon which our risk management framework rests, and put us in position to execute our investment program in future periods of duress.”