We recently Top 10 AI Stocks Upgraded by Wall Street AnalystsNVIDIA Corp (NASDAQ:NVDA) ranks third on the list, which is why the stock is worth taking a closer look at.
There's been a lot of noise about AI stock valuations and investors overpaying for big tech stocks that promise productivity gains, real AI products, AGI, and other things that are still far away. But the market doesn't seem to care what AI skeptics and naysayers believe. There's no end in sight to the AI-driven stock rally, and analysts expect more to come. Goldman Sachs' Scott Rabner recently said that a “wall of money” is coming toward the market. Rabner pointed to the massive $7.3 trillion sitting in money market funds and said he thinks the floodgates will open and investors will pour that money into stocks. Rabner's model predicts that billions of dollars ($29 billion to be exact) will flow into the market in the third quarter of 2024.
You don't need a crystal ball to know where billions of dollars are headed. AI is the hot topic everyone is betting on, and everyone is betting on it: pundits, billionaires, asset managers, and long-term value investors. Fundstrat Global Advisors co-founder Tom Lee recently told CNBC that investors have been “hesitant” for most of the year, but should “stick” with “what's working.” According to Lee, the topics that have been doing well lately are AI, weight loss drugs, and related topics.
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In this article, we've highlighted the top AI stocks that Wall Street analysts have recently upgraded or made bullish comments about. For each stock, we've included the number of hedge fund investors. Why are you interested in stocks that hedge funds are flocking to? The reason is simple: our research shows that by mimicking the top stocks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small and large stocks each quarter, and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (Click here for details).
Close-up of a colorful high-end graphics card plugged into a gaming computer.
NVIDIA (NASDAQ:NVDA)
Number of hedge fund investors: 186
NVIDIA Corp (NASDAQ:NVDA) has seen some bullish calls from Wall Street recently. Bank of America recently added NVIDIA Corp (NASDAQ:NVDA) shares to its US 1 list, which includes BofA's Best Investment Ideas, consisting of US-traded stocks with buy recommendations. NVIDIA Corp's (NASDAQ:NVDA) latest product announcements and plans unveiled at Computex show that NVIDIA Corp (NASDAQ:NVDA) has far more in its arsenal to bolster its growth engine. Analysts believe that NVIDIA Corp's (NASDAQ:NVDA) move to a new AI architecture known as Rubin (R100) and powerful H100 and Blackwell chips will easily beat competitors.
NVIDIA Corp (NASDAQ:NVDA) will begin shipping the H200 later this year. At the GTC conference, NVIDIA Corp (NASDAQ:NVDA) unveiled three accelerators: B200, GB200, and GB200 NVL72. All of these products will be growth catalysts for NVIDIA Corp (NASDAQ:NVDA) shares, justifying a P/E multiple of 71x, given that the company is expected to grow by over 100% this year and 32% next year. Based on Wall Street's 2026 EPS forecasts, NVIDIA Corp (NASDAQ:NVDA) is trading at a forward P/E multiple of 35.74x, making the stock valuation attractive given the company's growth catalysts.
But there are plenty of other attractive opportunities in the AI space. If you're looking for AI stocks that are more promising than NVIDIA but still trade at less than five times earnings, check out our report. Cheapest AI Stocks.
In its Q1 2024 investor letter, RiverPark Large Growth Fund said the following about NVIDIA Corporation (NASDAQ:NVDA):
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were the largest contributor for the quarter on the back of strong fourth quarter results in data center sales and strong first quarter guidance. The company reported quarterly revenue of $22.1 billion, up 265% year over year, and EPS of $5.16, up 487% year over year and 12% above expectations. First quarter revenue guidance was $24 billion, beating sky-high expectations by 8%. The artificial intelligence arms race started by ChatGPT, Alphabet's Bard and others is spurring demand for Nvidia's next-generation graphics processors.
NVDA is a leading designer of graphics processing units (GPUs) required for powerful computing. Over the past two decades, the company has evolved through innovation and adaptation from a primarily gaming-focused chip vendor to one of the world's largest semiconductor and software vendors. Over the past decade, the company has grown revenue by more than 20% annually while expanding operating margins and generating increasingly large free cash flows through an asset-light business model. Following recent results, NVIDIA founder and CEO Jensen Huang said in a company press release: “As companies race to apply generative AI to every product, service and business process, $1 trillion of installed global data center infrastructure will shift from general-purpose computing to accelerated computing.”
Overall, NVIDIA Corp (NASDAQ:NVDA) 3rd place Insider Monkey's List 10 AI Stocks That Analysts Are Upgrading. You can visit 10 AI Stocks That Analysts Are Upgrading Let's take a look at other AI stocks analysts are watching. While we acknowledge NVDA's potential, we believe that under-the-radar AI stocks have a better chance of delivering higher returns in a shorter time frame. If you're looking for AI stocks that are more promising than NVIDIA but still trade for less than 5x earnings, check out our report. Cheapest AI Stocks.
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Disclosures: None. This article was originally published on Insider Monkey.
