We recently published a list of 10 Most Profitable Large Cap Stocks to Buy Now. In this article, we are going to take a look at whereNVIDIA Corporation (NASDAQ:NVDA) stands against other most profitable large cap stocks to buy now.
The most profitable large-cap stocks, in terms of absolute net profit, are typically concentrated in industries with relatively high barriers to entry and substantial global demand. These include sectors like technology, healthcare, energy and consumer goods, where leaders can benefit from strong market positions, innovation and economies of scale. Furthermore, strong profitability usually translates very well into cash flow, which gives a lot of flexibility with capital allocation – the companies can either reinvest in growth during favorable times or support the stock price through repurchases when the market is less favorable. Consequently, the advantages of investing in such companies include stability, the potential for consistent revenue growth, and resilience during economic downturns.
READ ALSO: 10 Large-Cap Stocks with Insider Buying in 2025
In the last decade, the most profitable large cap stocks have mostly clustered in the technology sector, leveraging such factors as the giant global total addressable market and wide margins allowed by the technological advantage. Furthermore, some of these companies took the center of the stage during 2023-2024, a time when the AI megatrend opened a new growth frontier and led to rising stock market concentration; in other words, the most profitable companies became even more profitable. This trend has resulted in a widening gap between the leading tech giants and other sectors, as investors increasingly flock to these high-growth stocks, anticipating continued dominance and innovation.
However, besides technology, there are some business models that also allow for strong profitability and cash flow. First, there are energy leaders who are literal cash cows and generate tens of billions of dollars annually from energy operations, which are vital to the world economy and are unlikely to be disrupted anytime soon. Second, there is the financial sector, and particularly banks, which are considered the blood of the world economy – by intermediating operations worth trillions of dollars annually, the leading banks can capture a tiny share of those transactions, which overall results in giant amounts of net profit. Last but not least, some of the most profitable companies in the world can be found even in more competitive sectors like consumer discretionary.
We believe that the most profitable companies can enter the spotlight again at a time when the US and global economy are at an important crossroads. Not only are these companies immune to tariffs and less sensitive to macroeconomic conditions, interest rates, and consumer health, but they also generate tens of billions of dollars in free cash flow every year, which gives them flexibility to adjust to a new regime. Investor sentiment has shifted to a pronounced bearish, as the US stock market officially entered correction mode, with more than a 10% contraction since the February peak. It appears that the fears of Trump tariffs staying for the long-term, as well as the negative impact on GDP growth from major cuts in public funding, are finally hitting the markets. Going forward, as smaller-cap stocks are pressured by uncertainty and deteriorating consumer confidence, profitable large caps can become safe havens and attract capital. The key takeaway for investors is that if one wants to stay invested in the US equity market amid the current turbulent times, they’re better off sticking to the widest moat and most profitable names out there.
Our Methodology
To compile our list of most profitable large cap stocks, we searched for the publicly traded companies with the largest amount of net income generated in the latest financial year and ranked them accordingly. For each company we also include the number of hedge funds that own the stock, according to Insider Monkey’s database of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
Last year net income: $32.31 billion
NVIDIA Corporation (NASDAQ:NVDA) is a technology company specializing in GPUs, AI, and high-performance computing. Its GPUs are widely used in gaming, data centers, professional visualization, and autonomous vehicles. NVDA’s AI and deep learning technologies power applications in cloud computing, scientific research, and enterprise solutions. The company also develops system-on-chip (SoC) solutions for automotive and robotics industries. The company operates globally, supplying hardware and software solutions to industries that require advanced computing and AI capabilities. The California-based company ranked second on our recent list of 10 Hot AI Stocks to Buy Now.
NVIDIA Corporation (NASDAQ:NVDA) demonstrated strong performance with 18% sequential growth in data center revenue, driven by robust demand for their Hopper architecture. The company successfully launched Blackwell with significant initial revenue of $11 billion in Q4, despite facing supply chain complexities. NVDA’s networking business is positioned for growth in both InfiniBand and Ethernet segments, with a current run rate of approximately $2 billion in bookings. Regarding competition concerns, NVDA maintains that custom silicon development remains challenging, with many designs failing to reach market or requiring significant revisions.
NVIDIA Corporation (NASDAQ:NVDA)’s software and services strategy is evolving, with NVIDIA AIE and NIMs being crucial components for enterprise customers. On the financial front, while gross margins are temporarily impacted by supply chain expediting costs, the company expects to return to mid-70s margins in the second half of the year. Looking ahead, management sees significant growth potential in the AI market, emphasizing that there is still substantial opportunity with a $1 trillion installed base of general-purpose computing that needs transformation to accelerated computing. With more than $32 billion net profit in the latest fiscal year, NVDA is one of the most profitable large cap stocks to buy now.
Overall, NVDA ranks 9th on our list of most profitable large cap stocks to buy now. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.