We recently compiled a list of the 10 Best 5G Stocks To Buy According to Short Sellers. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other 5G stocks.
5G, or fifth-generation wireless technology, is the latest evolution in mobile networks, which is designed to significantly improve speed, reduce latency, and enhance the capacity and connectivity of mobile devices. A Market Research Future report estimates that in 2024, the 5G market is projected to be worth $15.03 billion, and by 2032, it could reach $229.41 billion. This rapid increase represents a compound annual growth rate (CAGR) of 40.60% during the forecast period. According to some experts, 5G is one of the most important trends in technology along with artificial intelligence (AI).
5G and AI Could be Catalysts of Global Digital Transformation
In a CNBC interview at the Mobile World Congress Shanghai on June 26, director-general of the GSM Association, Mats Granryd highlighted the deep connection between 5G and AI and suggested that their mutual rise is not accidental. He said that “AI feeds off 5G and 5G feeds off AI.” This is especially evident in China, where the development of standalone 5G networks is well advanced and discussions are already shifting toward 5G Advanced (5.5G). While some countries lag, like the Philippines, Mats pointed out that this dynamic between 5G and AI is most prominent in regions with widespread 5G coverage.
When asked about the rivalry between countries like the U.S. and China in AI and 5G, Mats said that such competition is insignificant. He said that from his experience on the GSMA board, which represents the 25 largest mobile operators globally, the focus is on creating common standards and specifications rather than competing.
He talked about the difficulties of the 2G and 3G eras when different technologies created challenges for global connectivity. The shift to a unified 4G standard was a pivotal moment that laid the foundation for the digital economy.
Mats believes that 5G will follow a similar path to become a common platform worldwide, which will also extend to AI. While some regions may advance faster than others initially, he showed confidence in the fact that everyone will eventually catch up and benefit from the integration of AI with 5G.
Our Methodology
For this article, we used stock screeners and ETFs to identify companies involved in the 5G market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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 275% since May 2014, beating its benchmark by 150 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)
Short Interest as % of Shares Outstanding: 1.12%
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is an American tech company known for designing graphics processing units (GPUs) and software used in everything from gaming to AI. The company excels in high-performance computing and AI technologies.
Its Graphics segment offers GeForce GPUs for gaming, GeForce NOW for game streaming, and Quadro/NVIDIA RTX GPUs for enterprise workstations, along with Omniverse software for metaverse development. The Compute and Networking segment includes data center computing platforms, networking systems, Jetson robotics, embedded platforms, and NVIDIA AI Enterprise solutions.
NVIDIA’s (NASDAQ:NVDA) Aerial platform is advancing 5G and future 6G technology with a range of tools designed for both commercial and research use. The Aerial CUDA-Accelerated RAN helps build software-defined, cloud-native 5G and 6G networks using GPU-accelerated libraries for important network functions. This framework is flexible and can be extended with AI components to enhance performance.
The Aerial Omniverse Digital Twin allows for detailed simulations of 6G networks, from individual towers to entire cities. It includes realistic models and simulators to help researchers improve network algorithms and transmission efficiency.
The company’s Aerial platform also supports the development of virtualized 5G networks, which run on the company’s computing hardware to boost performance. Aerial allows data centers to run both 5G and AI applications at the same time, which makes them more efficient and adaptable. For researchers, it offers the 6G Research Cloud Platform and provides access to these tools through the cloud to support advanced 6G research and development.
NVIDIA’s (NASDAQ:NVDA) shares were held by 179 hedge funds in the second quarter, at a combined stake value of $53.67 billion. Fisher Asset Management is the company’s biggest shareholder with 93.4 million shares worth $11.54 billion, as of June 30. It is our 6th best 5G stock to buy according to short sellers.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
Overall NVDA ranks 6th in our list of the best 5G stocks to buy according to short sellers. 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 timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
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