We recently compiled a list of the AI News Investors Probably Missed. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other AI stocks.
Investors have been looking for smart ways to play the artificial intelligence (AI) boom that has swept the global financial markets over the past two years. Most of the attention in this regard has been confined to obvious choices in semiconductors, software, and biotechnology. Even within these sectors, prominent companies and their AI initiatives have dominated headlines. However, there are several hidden gems within these sectors that offer the same bang for the buck, given present macro context, but are not in limelight as such. For example, Bernie Ahkong, an analyst at UBS, recently noted that the first phase of AI was interest towards chipmakers. In the second phase, investors moved towards the industrial companies which actually supply the components to the data centers. The present tilt towards utility and power firms is quite possibly the third phase of this AI focus.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
A recent study on artificial intelligence by Stanford University in the United States reveals that businesses are already outpacing academics when it comes to training AI models. For example, in 2023, the AI industry was able to train nearly 51 notable machine learning models compared to just 15 for academia. This happened despite the costs associated with training models rising. For instance, ChatGPT 4, the latest iteration of the popular ChatGPT that launched the AI wave back in late 2022, cost nearly $80 million to train. Similarly, Gemini Ultra, an AI tool developed by Google, cost $191 million to compute. The number of AI patents is also increasing, evidenced by the fact that since 2010, the number of granted AI patents has increased more than 31 times.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
Our Methodology
For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. 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).
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: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Susquehanna analyst Chris Rolland recently released an investor note on the chipmaker, detailing that pricing on the Hopper line of products for NVIDIA Corporation (NASDAQ:NVDA) had remained strong ahead of the upcoming Blackwell line. Per the analyst, aftermarket prices for the H100 had been relatively stable at slightly less than $30,000. down 0.6% in the third-quarter. He further added that there had not been any rise in H100 supply in the secondary market, suggesting that companies were holding on to their purchases. At current pricing and 70% utilization, there was a relatively short five-month hardware payback period for cloud service providers renting the H100, which would justify the continued spending, Rolland added.
Overall NVDA ranks 5th on our list of the AI stocks investors probably missed. 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.
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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