Nvidia stock was up over 3% by noon today to kick off the first trading day of 2025. With just two more trading days till Jensen Huang delivers his keynote address at the CES 2025 in Las Vegas, investor optimism is quite high. Tesla, the retail investors’ second most favorite stock in 2024, announced a disappointing quarterly deliveries number earlier today which means Nvidia continues to get all the investors attention.
The optimism surrounding the chip maker is well-justified. Nvidia’s Blackwell GPUs are so hyped up that the company has already received enough orders to keep it busy for the next 12 months. These GPUs are the most powerful the company has ever built. With tech companies moving on from LLM training to inference(decision-making based on already trained models), Nvidia GPUs continue to stay in demand. However, there’s more to the story.
Robotics seems to be the new arena where Nvidia wants to flex its muscles. The industrial robotics market is expected to be as big as $12 trillion according to Ark Invest. If this is remotely accurate, it would dwarf the Big Tech’s AI spending of the last two years. Moreover, Nvidia’s strength in software, including its ability to create real-time 3D environments for robot trainings, allow the company to create an ecosystem where it could easily control the bulk of the market.
Then there is the question of what Nvidia (NVDA) is going to do with all the cash it will get from selling Blackwell GPUs over the next 12 months. There’s a reason 2025 is being touted as the year of Blackwell. It will massively increase the company’s already strong cash pile. Could Nvidia start paying healthy dividends? It has enough cash to pay out dividends without affecting any future acquisitions. In fact, even if the company executed its $50 billion stock buyback program today, it would have some cash left. And that’s without even considering all the money the sale of Blackwell GPUs will bring in. Clearly, Nvidia is all the hype as we head into CES 2025 and investors are making their excitement known.
Nvidia is 5th on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 193 hedge fund portfolios held NVDA at the end of the third quarter which was 179 in the previous quarter. While we acknowledge the potential of NVDA as a leading AI 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 as promising as 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 was originally published at Insider Monkey.