A buy after the recent decline

We recently published a list of 10 AI news and analyst reviews you shouldn’t miss. With NVIDIA Corporation (NASDAQ: NVDA) ranking third on the list, the company deserves a closer look.

While everyone is talking about rate cuts, some analysts are questioning whether it is even necessary to start cutting rates at this point. The latest data released on Tuesday showed that retail sales in the US rose, while Wall Street analysts had expected a decline. Oksana Aronov, head of alternative fixed income market strategy at JPMorgan Asset Management, told CNBC that rate cuts are not even justified, as she believes there are no signs of a broader slowdown other than in the labor market.

Aronov said that rate cuts would further “loose” financial conditions. The analyst said that about 14 months ago, everyone looked at the consumer price index, which was at 3%, and expected the reading to fall to 2%. But even after all these months, the consumer price index is at 2.9% year-on-year. She said that the Fed should tread cautiously and the 2% inflation target would be “difficult to achieve” as government spending would continue to rise.

However, AI investors are looking beyond this debate and are already positioning themselves to invest in additional growth stocks at the start of the rate cut cycle.

For this article, we selected 10 hot AI stocks and discussed the latest news about them.

For each stock, we mentioned the number of hedge fund investors. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (Further details can be found here).

Photo by Christian Wiediger on Unsplash

NVIDIA Corp (NASDAQ: NVDA)

Number of hedge fund investors: 179

Dan Niles, founder and portfolio manager at Niles Investment Management, said in a recent interview with CNBC that the chipmaker's stock and revenue could double, although he believes NVIDIA Corp (NASDAQ: NVDA) is in a “digestion phase” as investors fear a decline in spending and want to see a return on their investments.

“I firmly believe that NVIDIA Corp (NASDAQ: NVDA) revenues can double from current levels over the next few years and that its share price can double as well.”

Niles again referred to the Cisco comparison, saying the company experienced several years of revenue growth before reaching its peak.

The story continues

Nvidia's declines following its latest quarterly results were more or less expected, as reports of Blackwell delays were confirmed by management. However, the delays were mainly due to a change in the Blackwell GPU mask. This does not affect the chip's main functional logic or design, according to analysts. Although Blackwell has been delayed by a few months, this does not change the core growth thesis for Nvidia.

Nvidia is expected to see tremendous growth due to the data center boom in the wake of the AI ​​wave.

At Nvidia's GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at about $250 billion. Over the next decade, that spending could reach $1-2 trillion, depending on how long those investments continue. During the same Q&A session, Bank of America's Vivek Arya echoed that estimate, saying the total addressable market would be in the $1-2 trillion range, especially if countries invest in their own AI infrastructure. By the end of the decade, spending could be at the high end of that range.

Of course, Nvidia won't command the entire $2 trillion potential, as it faces competition from companies like AMD and internally developed AI accelerators from Google, Amazon, and even Apple. Some analysts predict that Nvidia's data center market share will exceed $950 billion between 2025 and 2029 – less than half the total market – but still enough to make the company the leader in the sector.

Ithaka US Growth Strategy made the following statement on NVIDIA Corporation (NASDAQ:NVDA) in its Investor letter Q2 2024:

Overall, NVIDIA Corporation (NASDAQ: NVDA) ranks 3rd on Insider Monkey’s list with the title 10 AI news and analyst reviews you shouldn’t miss. While we recognize the potential of NVIDIA Corporation (NASDAQ: NVDA), we believe AI stocks promise higher returns and do so in a shorter time frame. If you are looking for an NVDA stock that shows more promise than AI but trades at less than 5 times earnings, read our report on the cheapest AI stock.

READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.

Disclosure: None. This article was originally published at Insider monkey.