We recently published a list of the top 10 AI news stories and analyst ratings you can't miss, and NVIDIA Corporation (NASDAQ:NVDA) ranks #4 on the list, so it's worth taking a closer look.
Investors are on edge ahead of Jensen Huang's AI giants' earnings announcements. Gene Munster, managing partner at Deepwater Asset Management, said in an interview with CNBC that if the Blackwell-related delays have a broader impact on the AI chip market, it could send the broader market into a pullback. The analyst predicted a “tough week” for big tech companies.
But in the long term, Munster is very bullish on the AI sector in general.
“I believe we're just getting started on this three-to-five-year AI-driven tech bull market, and these big tech companies are going to continue to do well for the next few years,” Munster said.
Analysts said Jensen Huang has suggested in previous quarters that demand for AI chips is beyond the company's ability to meet in the near term, and if he reiterates that in upcoming earnings calls, it would send a strong signal to investors about the potential of AI.
“There's a lot of awareness about AI, but I don't think the market has fully appreciated the importance it brings.”
In this article, we've summarized the most important latest AI news and analyst ratings on the leading AI technology stocks. For each company, we've mentioned the number of hedge fund investors. Why are we interested in stocks that hedge funds are flooding with? 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 each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more here).
Is NVIDIA Corporation (NASDAQ:NVDA) in the top 10 AI news and analyst ratings you can't miss?
NVIDIA (NASDAQ:NVDA)
Number of hedge fund investors: 179
Fundstrat's Tom Lee said in a recent interview with CNBC that despite the recent stock sell-off, technology is “still thriving because of AI” and that a position in NVIDIA Corp (NASDAQ:NVDA) should “further bolster that.”
He also thinks Nvidia's stock price multiple is attractive.
“NVIDIA (NASDAQ:NVDA) stock is trading at about 28 times forward earnings, which isn't a very high multiple for one of the most important companies in the world. So if tech is doing well and the Fed cuts rates, I think the overall market will expand,” Lee said.
Analysts are gearing up for NVIDIA Corp's (NASDAQ:NVDA) earnings, due to be released later this month, with Jefferies saying in its latest report that the company's quarterly results are likely to beat analysts' expectations by a wide margin.
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“We expect strong earnings performance in July and strong earnings guidance for October, beating estimates and guidance combined by about $1 billion,” the analysts said.
Analysts at Jefferies also see strong demand for Nvidia's Hopper chips.
NVIDIA Corp (NASDAQ:NVDA) shares are trending lower due to concerns about valuation, but Morgan Stanley has added the stock back to its top picks list. Analyst Joseph Moore said:
“As demand shifts from Hopper to Blackwell, visibility will actually increase as constraints shift back to silicon. H100 lead times are short, but H200 lead times are already long and should become even longer for Blackwell,” the company said.
However, recent earnings from the tech giant have raised concerns about NVIDIA Corp's (NASDAQ:NVDA) future growth trajectory. The company's major customers, including Meta Platforms and Alphabet, suggest it may be overbuilding and overspending on AI chips. NVIDIA Corp (NASDAQ:NVDA) sells about 2 million GPUs per year based on 2023 data. If demand eases and competitors increase production, the company will not be able to maintain its current growth trajectory.
Raymond James analyst Javed Mirza said in a report that NVDA recently “triggered a mechanical sell signal” based on the moving average convergence/divergence indicator. In a technical analysis report, he noted that the stock is trading below its 50-day moving average, showing early signs of selling pressure. This indicates that a consolidation phase that could last one to three months is on the way, according to Mirza. He further added that a sustained break below the 50-day moving average could lead to a drop to 94.94, potentially down another 16.9% from current levels.
In its Q2 2024 investor letter, Aoris International Fund said the following about NVIDIA Corporation (NASDAQ:NVDA):
“If information technology was the leading sector this quarter, then NVIDIA Corporation (NASDAQ: NVDA), the largest supplier of microprocessors used in generative AI applications, was the leading company. NVIDIA's shares rose by a third this quarter and are up 255% so far this year. Since the beginning of 2023, the company's market capitalization has increased 8.3 times, or $4.3 trillion, making NVIDIA the third-largest company in the world by this metric.
As a result of the extraordinary performance of NVIDIA and other large companies, the stock market has become increasingly concentrated. As the chart below shows, as of June 30, just five companies held 27% of the market capitalization of the top 500 companies in the US, more than double the average over the past 20 years.
The composition of the Aoris International Fund will always vary significantly from the overall stock market. There will be periods when this will lead to underperformance of the benchmark, as it did in the most recent quarter. When it comes to NVIDIA and other AI-centric companies, the rapid growth is exciting but makes it difficult to judge what is normal. We prefer to own established, large companies where we can make more confident, evidence-based judgements about growth and profitability.”
Overall, NVIDIA Corporation (NASDAQ:NVDA) ranks #4 on Insider Monkey's “Top 10 AI News & Analyst Ratings You Can't Miss” list. While we acknowledge NVDA's potential, we believe AI stocks have a better chance of delivering higher returns in a shorter time frame. If you're looking for AI stocks with more promise than NVDA but trading at less than 5x stock price, check out our report on the cheapest AI stocks.
Read next: Analyst sees new $25 billion 'opportunity' in NVIDIA, Jim Cramer recommended these 10 stocks in June.
Disclosures: None. This article was originally published on Insider Monkey.
