We recently compiled a list of the 10 AI News and Ratings Investors 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.
News agency Reuters recently reported that the rise of artificial intelligence is reshaping investment strategies, driving massive capital demands that challenge traditional tech-sector dynamics. Unlike previous tech booms focused on software, the current AI wave is heavily centered on hardware, which is significantly more capital-intensive. Per the report, big tech companies are projected to spend over $200 billion on capital expenditures in 2025 nearly double the levels of 2021. These investments primarily target AI infrastructure, from data centers to advanced chips.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
The report contends that the shift to hardware-oriented AI development introduces long-term financial risks. AI infrastructure projects often have extended timelines before profitability, making them vulnerable to economic slowdowns, inflation, and geopolitical factors. AI startups, too, face challenges. Their capital-intensive models rely on large funding rounds, with 2024 seeing nearly half of US venture capital allocated to AI. However, per Reuters, economic downturns or high capital costs could restrict funding availability, slowing innovation and reducing demand for AI hardware. Additionally, hardware businesses face cyclical risks, including inventory fluctuations and delayed scalability.
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.
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.
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. On November 21, Wedbush analyst Matt Bryson raised the price target on the stock to $175 from $160 and kept an Outperform rating on the shares following quarterly results. The advisory notes Nvidia again delivered to heightened investor expectations as Q3 met investor expectations, Q4 forecasts suggest a path to modeled buyside revenues, and the company favorably addressed perceived potential risks.
Overall NVDA ranks 2nd on our list of the AI stocks investors shouldn’t miss. 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: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
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