1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 186
Trailing 10-Year Returns: 70.55%
Headquartered in Santa Clara, California, NVIDIA Corporation (NASDAQ:NVDA) is a leading multinational technology company known for designing and selling GPUs (Graphics Processing Units) for various applications, including gaming, cryptocurrency mining, and professional uses. Additionally, NVIDIA provides chip systems for sectors such as vehicles, robotics, and other tools. It is one of the top stocks in the Vanguard 500 Index Fund Investor Shares.
NVIDIA Corporation (NASDAQ:NVDA)’s stock has continued its market-leading rally this year, pushing the AI chip leader’s valuation past $3 trillion and increasing its influence within the S&P 500. Notably, NVIDIA Corporation (NASDAQ:NVDA) alone accounts for 34.5% of the S&P 500’s market cap gains so far this year, according to Apollo Chief Economist Torsten Sløk. The stock has soared 173.78% year-to-date and is up more than 208.92% from a year ago, driven by the AI craze gripping Wall Street. The company’s quarterly earnings indicate that the demand for AI chips shows no signs of slowing.
Additionally, NVIDIA Corporation (NASDAQ:NVDA)’s latest product announcements and plans unveiled at Computex demonstrate its robust growth potential. Analysts highlight the company’s transition to a new AI architecture known as Rubin (R100) and its powerful H100 and Blackwell chips, which are seen as superior to competitors’ offerings.
During the first quarter of this year, Insider Monkey’s research revealed that 186 out of the 919 hedge funds covered had invested in NVIDIA Corporation (NASDAQ:NVDA). Among these investors, Rajiv Jain’s GQG Partners emerged as the largest shareholder with a $12.07 billion investment in the company.
Patient Capital Opportunity Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“This quarter we entered two new positions, while exiting four positions. Our first new position was NVIDIA Corporation (NASDAQ:NVDA), which we bought early in the quarter. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and FCF an astounding 126%, 392%, and 610%, respectively, over the last year. While much of the focus is on Nvidia’s market cap reaching $2.3T, up 230% over the last year, the company’s valuation has actually come down over that period. As of 3/31/23, consensus was valuing the company at 61x forward EPS. This compares to today, where the company is being valued at 37x. While yes, we have never seen a company expand their market cap by so much so quickly, we have also never seen a company grow their fundamental earnings and cash generation so quickly (and which is actually expanding faster than valuation). While competitors are working to enter the GPU space, Nvidia has created a moat around their GPUs with their CUDA software offering. While we do expect the large cloud players to continue to move into the market, we think NVDA can continue to demand top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of accelerated computing and artificial intelligence (AI).
Nvidia Corp. (NVDA) was a top performer in the quarter gaining 82.5% in the period. While the company has had an impressive run, gaining 242% over the last year, the valuation has been supported by the impressive growth in Revenue (126%), EPS (392%) and free cash flow (610%) over the last year. The company has solidified its position in the GPU space supported by its proprietary software CUDA. While we expect competition to increase, we think NVDA can continue to maintain top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
While we acknowledge the potential of NVDA as an AI play, there are more attractive opportunities in the market. If you are looking for an AI stock that is as promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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