We recently compiled a list of the 17 Latest AI News and Analyst Ratings You Should Not Miss. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other AI stocks under hedge funds’ radar.
It is no surprise that companies in the United States and China are leading the rest of the world when it comes to artificial intelligence. Conservative estimates about the impact of AI on the global economy, made by market experts at professional services firm PwC, reveal that AI-related gains, equal to close to $11 trillion, will account for nearly 70% of total global economic impact by 2030. In China, AI is expected to contribute to a nearly 26% boost to the GDP within the next six years, while this figure in the US will likely be 15%. AI no doubt represents the biggest commercial investment opportunity in this fast-paced world economy.
Smart companies are seizing on this opportunity. According to market research firm IDC, investments in AI infrastructure will cross $30 billion this year and are projected to grow to $47 billion by 2028. This represents approximately 30% of the total global spending in AI. One of the most prominent AI use cases is in the customer service world. In this area, global businesses have spent more than $16 billion in 2024 so far. The impact of these investments in AI will be significant down the road. AI is likely to contribute to a $15 trillion boost to the global economy by 2030, up 14% from current levels.
Like other sectors of the economy, Wall Street is no stranger to AI. The debut of ChatGPT in November 2022 marked the beginning of the AI revolution in the world of finance. Since then, according to the International Monetary Fund (IMF), sales of software, hardware, and services for AI systems have climbed rapidly and will top $400 billion in 2027. Financial sector spending is likely to double to nearly $100 billion in 2027, with a compound annual growth rate of close to 30% — the fastest of five major industries. Hedge funds, often the pioneers of cutting-edge technology, are embracing generative AI as well.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among 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).
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NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. The company is the most famous manufacturer of graphic processing units (GPUs), powerful chips that provide power for the computational complexity of AI tasks. Earlier this year, the firm revealed Blackwell, the latest GPU dubbed the most powerful chip in the world, surpassing the efficiency of the previous Hopper model. Prominent tech names like Google, Microsoft, and Meta Platforms were in line to snap up these chips off the production line for their AI data centers, but last-minute design flaws have forced NVIDIA to delay the launch of these chips by at least three months, raising concern just before the company releases earnings results for the third quarter.
However, analysts on Wall Street have backed NVIDIA Corporation (NASDAQ:NVDA) to emerge from this hiccup without too much damage. For example, Jefferies analyst Blayne Curtis, who has a 79% success rate on NVIDIA calls, has a Buy rating on the stock with a price target of $150. He recently forecast that the firm would beat market expectations on earnings and guidance by $1 billion each. He also noted that the demand for the Hopper chips of NVIDIA remains robust, and inventories and continued production should help bridge the gap to ramping Blackwell.
Overall NVDA ranks 1st on our list of the best AI stocks to buy. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
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