1. NVIDIA Corp. (NASDAQ:NVDA)
Upside Potential: 56.8%
Market Cap: $2.51 trillion
Number of Hedge Fund Holders: 223
NVIDIA Corp. (NASDAQ:NVDA) is a leading innovator in the design and production of graphics processing units (GPUs), system-on-a-chip (SoC) solutions, and AI-driven hardware and software. The company’s GPUs are essential to high-performance computing, AI training, and inference and serve as the backbone of data center infrastructure worldwide.
After the emergence of China’s DeepSeek, concerns over the efficiency of the huge AI investments, along with market volatility and macroeconomic uncertainty, have kept some investors cautious. However, there is a strong belief that NVIDIA Corp. (NASDAQ:NVDA)‘s long-term investment case remains robust. Its cutting-edge technology drives advancements in artificial intelligence, deep learning, and data analytics, reinforcing the company’s pivotal role in shaping next-generation computing.
In their “Alger Spectra Fund” Q1 2025 investor letter, portfolio managers at investment management company Fred Alger Management highlighted the company’s strong prospects based on rising demand for NVIDIA products due to the increasing need for computing power. They stated:
“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.”
On April 25, Morgan Stanley analyst Joseph Moore remained highly optimistic on NVIDIA, driven by demand for inference chips. His analysis suggests that this demand is further fuelled by the shortage of inference chips across regions and faster growth in token generation. Such growth bodes well for the company as organizations must invest more into the infrastructure required for such workloads. Despite near-term supply chain and macro issues, the analyst believes the company’s strong positioning in the AI cycle and production capabilities support his optimistic view. He maintained a Buy rating with a price target of $160.
Overall, NVDA ranks first on our list of the best and worst Dow stocks for the next 12 months. While we acknowledge the potential of Dow stocks, our conviction lies in the belief that 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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