We recently compiled a list of 15 trending AI stocks based on the latest analyst ratings and news, and in this article we'll take a look at how NVIDIA Corporation (NASDAQ:NVDA) stands relative to other trending AI stocks.
The AI industry is experiencing explosive growth, making it a highly attractive sector for potential investors. According to a Bloomberg Intelligence report, the global generative AI market was valued at approximately $40 billion in 2022, just before ChatGPT's launch, but is expected to expand at a compound annual growth rate of more than 40% to reach over $1.3 trillion within the next decade. This growth is due to the rapid adoption of AI technologies in various industries, including healthcare, finance, retail, and manufacturing, which are leveraging AI to increase efficiency, reduce costs, and create new revenue streams. For example, in healthcare, AI-driven diagnostics and personalized medicine are revolutionizing patient care, leading to more accurate and timely treatment. The financial sector is also reaping the benefits of AI through advanced algorithms for fraud detection, risk management, and personalized banking services.
For more on these trends, check out “The 33 Most Important AI Companies to Watch” and “20 Industrial Stocks Already Riding the AI Wave.”
The AI market is expanding not only in applications but also geography. North America is the dominant force in AI development, with companies like Google, Microsoft, and Amazon leading the way. However, the Asia-Pacific region, and especially China, is rapidly catching up, driven by heavy investments and a strong government push for AI adoption. The Chinese government has ambitious AI plans that aim to make China a global leader in AI by 2030, at which point China's AI industry is projected to be worth $150 billion. This geographic diversification is crucial for investors who want to reduce their risk exposure by playing in different markets.
Investors should also consider the significant investments being made in AI startups, a key driver of innovation. According to CB Insights, AI startups will raise more than $66 billion in funding in 2022, a record year despite general economic uncertainty. This trend is expected to continue as more venture capital firms and corporate investors recognize AI's potential to disrupt traditional industries. Additionally, the integration of AI with other emerging technologies, such as the Internet of Things (IoT), 5G, and quantum computing, could create new opportunities and markets, further driving growth.
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Our Methodology
In this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in stocks that hedge funds are flooding? The reason is simple: our research shows that you can outperform the market by mimicking the top picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks every quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more details here).
Close-up of a colorful high-end graphics card plugged into a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing, and networking solutions. The company is known for the graphic processing units (GPUs) it sells. These GPUs are famous because they can handle the complex computational tasks demanded by AI software. The company has been investing in AI-specific chips, or AI-focused versions of GPUs, since 2012. The GPU business has been making waves since 2017 when the company launched Volta, a chip that could be five times faster than its competitors. Since then, several successors to Volta have been launched, most notably Ampere in 2020, Hopper in 2022, and the latest Blackwell, which is reportedly due to launch early next year.
NVIDIA Corporation (NASDAQ:NVDA) also has a large networking portfolio that could serve the company well as AI infrastructure investment picks up steam. Wall Street analysts are bullish on the stock ahead of the company's third-quarter earnings report next week. Goldman Sachs rates the stock a “buy” with a target price of $135. In a recent investor note, the advisory noted that the environment for NVIDIA is constructive, with an attractive risk/reward for the possibility of a positive earnings revision.
Overall, NVDA ranks #1 on our list of trending AI stocks based on the latest analyst ratings and news. While we acknowledge NVDA's potential as an investment, we believe some AI stocks have the potential to deliver higher returns in a shorter time frame. If you're looking for AI stocks that are more promising than NVDA but still trade for less than 5x its earnings, check out our report on the cheapest AI stocks.
Read next: Michael Burry is selling these stocks and Jim Cramer is recommending these stocks.
Disclosures: None. This article was originally published on Insider Monkey.
