We recently published a list of the 7 Best Performing Long Term Stocks in 2024. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other best performing long term stocks in 2024.
After the latest 50 basis point rate cut by the Federal Reserve, the market has been performing well. All of the major market indices have been in the green since then and experts are taking it as a good sign.
We discussed the Fed’s rate cut in our article about the best day trading stocks. Here is an excerpt from the article:
“…the Federal Open Market Committee (FOMC) chose to lower its policy interest rate by 50 basis points, a move intended to ease monetary policy. Powell explained that this action reflects growing confidence that labor market strength can be maintained, while inflation continues to decrease toward the Fed’s target. Powell emphasized the Fed’s flexibility in its approach and noted that future rate changes will depend on incoming data and the evolving economic landscape.
When questioned about the likelihood of future rate cuts, Powell said that each decision would be data-driven and made on a meeting-by-meeting basis. The Summary of Economic Projections (SEP) suggests a federal funds rate of 4.4% by the end of the year, with further reductions expected in the years ahead, which points to expectations of lower inflation and slightly higher unemployment.”
Understanding the Current Stock Market Optimism
Lead writer for Markets Live at The Wall Street Journal, Gunjan Banerji also shares the market’s optimistic sentiment as she explained in an interview with CNBC on September 25. Banerji discussed the growing optimism in the stock market despite ongoing bullish sentiment for the past few years. She highlighted how the recent rate cut by the Federal Reserve boosted market confidence, with the VIX (volatility index) dropping to its lowest levels and other indicators like high-yield bonds and options showing continued belief in the rally.
Dominic Chu of CNBC expressed concerns about potential market overconfidence, given the calmness amid geopolitical risks, the upcoming U.S. presidential election, and consumer spending challenges. Banerji acknowledged these risks but emphasized that much of the market’s optimism is tied to the Fed’s actions, with people reassured by the larger-than-expected rate cut.
Finally, Banerji pointed out a broadening of the market rally beyond the tech sector and mentioned the strong performances in sectors like energy and materials, and record highs from companies like Caterpillar and McDonald’s, which indicates a healthier, more diverse market rally.
Our Methodology
For this article, we used stock screeners to identify nearly 60 mid to mega-cap stocks with year-to-date share price returns of over 100%. Next, we narrowed our list to 7 stocks with the highest average analyst price target upside, as of September 24. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds. The stocks are sorted in ascending order of their upside potential.
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).
Is NVIDIA Corporation (NASDAQ:NVDA) the Best Performing Long Term Stock in 2024?
NVIDIA Corporation (NASDAQ:NVDA)
Average Analyst Price Target Upside: 24.10%
Stock Price Performance YTD: 150.92%
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a powerhouse in the technology sector, known for its work in graphics processing units and AI. It was originally focused on advancing the gaming experience but has now transformed the landscape of computer graphics with the launch of its GPU in 1999, which significantly improved video game performance and 3D applications.
Over the years, the company has broadened its product range to include central processing units, data processing units, and various software solutions tailored for high-performance computing and deep learning. Today, it serves a wide range of industries, including gaming, professional visualization, data centers, automotive, and healthcare.
It takes its place on our list of the best performing long term stocks in 2024. The stock has a consensus Strong Buy rating from 64 analysts. As of September 24, the average price target of $150.00 represents an upside of 24.10% from the present levels.
One of the most eagerly awaited developments is the Blackwell product line. NVIDIA (NASDAQ:NVDA) forecasts substantial revenue from this new series, which promises to be a game-changer in the field. The order book for both the current Hopper chip lineup and its successor, Blackwell, is strong.
The products feature advanced technology that allows clusters of NVIDIA chips to function as cohesive units that process massive amounts of data and execute computations at unprecedented speeds. This is especially valuable for training the neural networks that power modern AI applications.
Demand for the company’s existing products remains strong, and as supply chains improve, orders for the Blackwell range are steadily increasing. CEO Jensen Huang has emphasized that the company is ramping up production of the Blackwell GPU and is on track to begin shipments in the fourth quarter.
While some engineering challenges have arisen that may delay certain product releases, the overall momentum is positive, and NVIDIA (NASDAQ:NVDA) is ready to scale production as it moves into the next year.
NVIDIA (NASDAQ:NVDA) was held by 179 hedge funds in the second quarter and the stakes amounted to $53.67 billion. Fisher Asset Management is the top shareholder of the company and has a position worth $11.54 billion as of Q2.
Ithaka Group stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
Overall, NVDA ranks 6th on our list of the best performing long-term stocks in 2024. 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 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.