A buy recommendation after the recent decline

We recently published a list of 10 AI News and Analyst Ratings You Can’t Miss. With NVIDIA Corporation (NASDAQ:NVDA) ranking third on the list, it deserves a closer look.

While everyone is talking about rate cuts, some analysts are questioning whether it was even necessary to start cutting rates at this point. The latest data released on Tuesday showed that U.S. retail sales rose, while Wall Street analysts had expected a decline. Oksana Aronov, head of market strategy for alternative fixed income at JPMorgan Asset Management, told CNBC in an interview that rate cuts aren’t even warranted, as she doesn’t think there are signs of broader weakness, except in the labor market.

Aronov said cutting rates would further “easify” financial conditions. The analyst said that about 14 months ago, everyone was looking at the CPI at 3% and expecting the metric to fall to 2%. But even after all these months, the CPI is still at 2.9% year-over-year. She said the Fed needs to proceed cautiously and that the 2% inflation target would be “elusive” because fiscal spending will continue to rise.

However, AI investors are looking beyond this debate and are already preparing for more growth stocks as the rate cut cycle begins.

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

For each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has delivered a 275% return since May 2014, outperforming its benchmark by 150 percentage points. (see more details 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 despite his belief that NVIDIA Corp (NASDAQ:NVDA) is going through a “digestion phase” as investors fear a slowdown in spending and want to see a return on their investments, the chipmaker’s stock and revenue could double.

“I strongly believe that NVIDIA Corp (NASDAQ:NVDA) revenues can double again from current levels in the coming years and that the stock price can also double.”

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

The story continues

Nvidia’s declines following its latest quarterly results were more or less expected amid Blackwell delay reports that were confirmed by management. However, the delays were primarily due to a change in Blackwell’s GPU mask. That doesn’t affect the core functional logic or design of the chip, according to analysts. While Blackwell has been delayed by a few months, it doesn’t change the core growth thesis for Nvidia.

Nvidia is expected to experience tremendous growth thanks to the data center boom and the AI ​​wave.

At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at around $250 billion. Over the next decade, that could reach between $1 trillion and $2 trillion, depending on how long this level of investment continues. During the same Q&A session, Bank of America’s Vivek Arya echoed this estimate, suggesting that the total addressable market would fall in the $1-2 trillion range, largely as countries invest in their own AI infrastructure. Spending could be at the high end of that range by the end of the decade.

Of course, Nvidia won’t dominate the entire $2 trillion opportunity, as it will face competition from companies like AMD and homegrown AI accelerators from Google, Amazon and even Apple. Some analysts believe Nvidia’s data center market share will exceed $950 billion between 2025 and 2029 — less than half of the total market — but still enough to make it the industry leader.

Ithaka US Growth Strategy has made the following statement about NVIDIA Corporation (NASDAQ:NVDA) in its Letter to Investors Q2 2024:

Overall, NVIDIA Corporation (NASDAQ:NVDA) ranks third on Insider Monkey’s list with the title 10 AI News and Analyst Ratings You Can’t Miss. While we recognize the potential of NVIDIA Corporation (NASDAQ:NVDA), our conviction is based on the belief that AI stocks offer a better chance of delivering higher returns, and in a shorter time frame. If you’re looking for an NVDA stock that shows more promise than AI but trades at less than 5x earnings, check out our report on the cheapest AI stocks.

READ ALSO: Analyst Sees New $25 Billion ‘Opportunity’ for NVIDIA And Jim Cramer recommends these stocks.

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