We recently compiled a list of the 10 Most Promising Tech Stocks According to Hedge Funds. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other promising tech stocks.
NASDAQ is Poised for Long-Term Returns
Big tech is expected to outperform in the coming months. On October 2, Ari Wald, Oppenheimer’s Head of Technical Analysis, appeared in an interview on Yahoo Finance to discuss his market thesis and explain why investors must consider high-growth companies.
Wald highlights that market breadth is expected to remain high supporting extended highs throughout the end of 2024. In addition to that, he expects the bull cycle to remain intact and believes the trend will continue in 2025. During the late summer, the market saw a change in the high beta versus low volatility ratio stocks. It was seen that high-beta stocks could not keep up with high dividend-paying and lower-volatility names.
Given the rotational nature of the market, Wald expects higher beta names to make a strong comeback and reclaim their leadership position. Wald suggests that investors should consider investing in higher growth companies, as the Nasdaq and Russel 100 are expected to lead again. Trends show that the mag seven is growing and climbing, as the market conditions continue to settle.
Viewing Tech Stocks on Valuations Alone is Wrong, Strategist Says
Technology stocks have more room to run. On October 14, Malcolm Ethridge, Capital Area Planning Group managing partner, appeared in an interview on CNBC where he discussed the technology market outlook and revealed his favorite picks.
Ethridge suggests that judging stocks based on their valuations alone is a big mistake, especially in the current market cycle which is heavily influenced by the AI boom. Looking at the broader perspective, he believes there are a lot of positive opportunities among the magnificent seven and outside of it.
He adds that companies among the mega tech have been pouring billions into generating large language models and the likes of it. He also suggests that most of this technology is yet to be understood and therefore the true value we can derive from these technologies is yet to come. These companies also have a lot of intrinsic value and there is more to be realized soon.
Now that we have studied the technology market outlook, let’s take a look at the most promising tech stocks according to hedge funds. You can also read our piece on the most promising AI stocks according to analysts.
Our Methodology
To come up with the most promising technology stocks according to hedge funds, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising tech stocks based on the hedge fund sentiment as of Q2 2024.
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), also referred to as the AI star, is one of the most promising technology stocks according to hedge funds. The chip maker is also a provider of cloud services and gaming products.
The company is rapidly growing and garnering attention from across the globe. Recently the company closed a deal with Salesforce and also launched a new AI tool to meet the needs of the next generation of mobiles, robots, autonomous vehicles, and 5G. On October 8, NVIDIA Corporation (NASDAQ:NVDA) partnered with TSMC to push the limits for the next generation of advanced semiconductor chips using Nvidia’s computational lithography platform.
NVIDIA Corporation (NASDAQ:NVDA) is expected to generate $32.5 billion in revenue during the fiscal third quarter of 2024. This revenue is likely to come from its rapidly growing Hopper architecture and its new and improved Blackwell Chips. By the end of this year, the company is also expected to ramp up production for the chips.
On October 14, Ben Reitzes, Melius Research’s head of technology research, appeared in an interview on CNBC where he discussed his outlook on NVDA. He suggests that there is a lot of upside near the company’s growth estimates and revenue, quite less than any other stock. According to him, NVDA will be trading at one time its P/E to growth ratio in 2025, which is highly attractive for a name as influential as NVDA. He adds that the demand for its Blackwell chips is huge and the company will have to ramp up production.
There is no denying that NVIDIA Corporation (NASDAQ:NVDA) has a crucial role to play in the artificial intelligence industry, which explains why 179 hedge funds were bullish on the stock at the close of Q2 2024.
Ithaka Group’s Ithaka US Growth Strategy 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 3rd on our list of the most promising tech stocks according to hedge funds. 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 time frame. 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.