We recently published our list of the top 10 AI trending stocks for Q4. In this article, we’ll take a look at how NVIDIA Corporation (NASDAQ:NVDA) stands compared to other top trending AI stocks in Q4.
As LLMs continue to monopolize data from the open internet for training, publishers are increasingly concerned about intellectual property and compensation. In the latest development, the New York Times has issued a cease-and-desist letter to Perplexity, stopping it from using the data for training without permission.
Speaking about the news on CNBC, Deepwater Asset Management’s Gene Munster said these developments could be “scary” for LLMs in the short term.
“I think it will go from bad to worse in the short term because the short-term economics of these large language models are scary. I’d like to briefly explain these numbers. , OpenAI is paying NewsCorp about $50 million, and it’s expected to generate about $4 billion in revenue this year and $11 billion next year, so that’s measurable.
However, in the long term, Munster believes that these licensing deals will not have a negative impact given the ROI that large LLM firms enjoy.
Also read: 7 Best Stocks to Buy for the Long Term and Jim Cramer’s 8 Cheap Stocks to Invest in
Analysts also made predictions for Perplexity. He believes the company will be acquired because it competes with a number of “big players.” He quoted Oracle’s Larry Ellison as saying that a “unique” large-scale language model would cost about $100 billion.
“So when you look at OpenAI’s $6 billion, it needs to be raised in billions of dollars, not millions. It’s a big raise for a private company that’s going fast, but it’s also going to get acquired at some point. Please understand that they are up against too many other big guns here to try and reach the coveted 4 or 5 spots in the LLM world. ”
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Number of hedge fund investors: 179
BofA raises NVIDIA Inc. (NASDAQ:NVDA) full-year 2025 earnings forecast from $2.81 to $2.87 per share, 2026 forecast from $3.90 to $4.47, and 2027 forecast from $4.72 to $5.67 Adjusted to dollars. The company also maintained its Buy rating and raised its price target from $165 to $190. Nvidia stock neared new highs this week.
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“We view NVDA’s free cash flow generation with margins above 45-50% to be undervalued by almost double the Mag-7’s average of 23-25%,” said BofA, led by Vivek Arya. analysts said in a note. “In value terms, NVDA has the potential to generate more than $200 billion in free cash flow over the next two years, putting it in parity with Apple (AAPL) and giving it room to grow,” BofA said. It also pointed to Nvidia Corporation’s (NASDAQ:NVDA) growing role in corporate collaborations with companies such as Accenture (ACN), ServiceNow (NOW), and Microsoft (MSFT).
Nvidia Corp (NASDAQ:NVDA) holds a commanding 80% to 85% share of the $400 billion market, and BofA Securities is raising its revenue forecast for the company.
NVIDIA’s decline after its second-quarter results was more or less expected following Blackwell’s delayed report confirmed by management. However, the main cause of the delay was due to changes in the Blackwell GPU mask. Analysts say this does not affect the chip’s core functional logic or design. Although Blackwell’s plans have been delayed by several months, Nvidia’s core growth theme remains the same.
Nvidia will see significant growth on the back of the data center boom amidst the AI wave.
At Nvidia’s GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at approximately $250 billion. Depending on how long this level of investment continues, the total could be between $1 trillion and $2 trillion over the next decade. In the same Q&A session, Bank of America’s Vivek Arya echoed this estimate, saying that the total addressable market is in the range of $1 trillion to $2 trillion, especially if countries invest in their own AI infrastructure. suggested that it would fit within. By the end of the decade, spending is likely to reach the high end of that range.
Of course, NVIDIA doesn’t monopolize the entire $2 trillion opportunity, as it faces competition from companies like AMD, Google, Amazon, and even Apple’s homegrown AI accelerator. Some analysts believe that NVIDIA’s data center market share from 2025 to 2029 will exceed $950 billion, less than half of the total market, but still enough to make it a leader in the field. .
In its Q3 2024 investor letter, Vltava Fund said of NVIDIA Corporation (NASDAQ:NVDA):
“Over the summer, we spent a lot of time researching the wave of AI-related investments. This spans a wide range of sectors, but our view can be summarized very briefly as follows: Yes, the beneficiaries of the first phase will primarily be companies in the semiconductor sector, with NVIDIA Corporation (NASDAQ:NVDA) likely the biggest beneficiary, as it builds out huge data centers. We know who NVIDIA’s customers are: companies like Meta, Alphabet, and Microsoft. What’s not entirely clear, however, is who NVIDIA’s customers are and will continue to be, and more importantly, who they will be from AI. The question is when and if we can create enough demand for AI services to make it profitable and justify the huge investments that all these companies have made. The further you get from the starting point that NVIDIA represents in its broader estimates, the less reliable those estimates become. Yes, there is ongoing investment in AI capabilities, and that investment continues to be huge. They are in great demand, not only in chip manufacturers and the semiconductor sector, but also in several other sectors. In fact, building an AI cluster will also require the construction of new semiconductor factories, new energy sources, and all related infrastructure over the next decade. Building an AI center could require a 20% increase in U.S. energy consumption, and the required investment would be orders of magnitude higher, perhaps double orders of magnitude. .”
Overall, NVDA ranks 4th on our list of top trending AI stocks for the fourth quarter. We see the potential in NVDA, but behind the scenes we believe AI stocks have great potential to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks with more promise than NVDA, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: BlackRock’s 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks.
Disclosure: None. This article was originally published on Insider Monkey.
