We recently compiled a list of 15 AI news that investors should miss. In this article, we’ll take a look at how NVIDIA Corporation (NASDAQ:NVDA) stands against other AI stocks that investors should overlook.
The development of artificial intelligence is a hot topic in various fields. From high-profile legal battles to breakthrough advances in model performance and safety protocols, AI is reshaping the landscape across industries at an unprecedented pace.
Related Articles: 15 AI News Investors Can’t Miss and 20 AI Trending Stocks with Latest News and Ratings
Before we move on to the latest AI news, let’s talk about Morningstar’s recent report. The investment research firm said that for the third year in a row, investors are moving away from exchange-traded funds (ETFs) tied to specific themes and investing in funds tied to broad stock market benchmarks that are “at all-time highs.” It was revealed that there was. Despite the overall growth in equity ETFs, thematic ETFs lost $5.8 billion in investor capital in 2024. This is more than the $4.8 billion in outflows for all of 2023. Why? This year, broad market index returns have raised the bar for thematic funds.
“It’s not that people don’t like the idea of themes anymore, it’s that a bull market dominated by a few megacaps has made it harder for any theme to stand out.”
Thematic ETFs often suffer due to mistimed investments, with investors typically missing out on two-thirds of their profits, according to Morningstar. Some AI-themed funds have high holdings, but high fees and timing issues reduce their overall appeal.
“If the S&P 500 megacaps don’t perform as well as they do today, I think the focus will shift back to thematic ETFs.”
Additionally, while AI remains a key focus for many thematic ETFs, its impact extends far beyond investing. Consider that Penguin Random House was the first of the five major English-speaking publishers to amend its copyright information. The publisher recently added language to its copyright page that prohibits the use of these books for AI training. Without clear guidelines and processes in place, publishers and AI companies will increasingly come into conflict in the future. In a similar effort, the New York Times sent a “cease and desist” notice to AI-powered research firm Perplexity AI, asking it to stop using the paper’s content for generative AI purposes. The news publisher claims that AI’s use of the material violates copyright law.
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In other news, US-based artificial intelligence public interest startup Anthropic has now added comprehensive updates to its safety policy, strengthening its guardrails as AI capabilities improve. This effort to make AI safer is in stark contrast to competitors such as OpenAI, which focuses on improving functionality and performance, and is very likely to threaten safety guidelines in the future. According to McKinsey, 63% of companies believe the risk of inaccuracy is relevant. However, only 38% of companies are working on risk mitigation.
Artificial intelligence may be scary, but it can be just as beneficial to humanity, if not more so. In its latest achievement, AI helped UCLA researchers develop a deep learning framework that learns to automatically analyze and diagnose MRI and other 3D medical images. It also achieves accuracy comparable to that of medical professionals in a fraction of the time. Another breakthrough from physical AI company Archetype AI will revolutionize the way we understand and interact with the physical world. The model, named Newton, has demonstrated an unparalleled ability to generalize to a variety of physical phenomena using only raw sensor measurements as input.
Finally, in a round-up of the latest AI news, a government post reveals that a U.S. rule banning certain U.S. investments in artificial intelligence in China is under final consideration. The rule, which requires U.S. investors to notify the Treasury Department regarding some investments in AI and other stemming technologies, is based on an executive order signed by President Joe Biden in August 2023. The order is aimed at ensuring that U.S. investors’ know-how does not support the Chinese military. . Chipmakers and related companies that could be affected by the decision declined to respond to Reuters requests for comment.
methodology
In this article, we selected AI stocks by examining news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
A close-up view of a colorful high-end graphics card connected to a gaming computer.
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a global technology company that designs cutting-edge chips, systems and software for the AI factories of the future. The company is said to represent the “dominant” infrastructure player behind the current rise of the AI sector.
Wall Street is buzzing with excitement about NVIDIA Corporation’s (NASDAQ:NVDA) new AI chip, Blackwell. Sector analysts are enthusiastic that Blackwell’s early rush could lead to a big rally for the company in the fourth quarter. On October 18, Lumida Wealth Management CEO Ram Ahluwalia spoke on Yahoo Finance’s Catalysts about how things are going for NVIDIA Corporation (NASDAQ:NVDA).
Lumida’s CEO says the company is still in the “early stages” and expects NVIDIA stock to reach $150 between now and the end of the year. Each hyperscaler will spend $50 billion to $100 billion on GPU computing, he says, and the main beneficiary will be NVIDIA Corporation (NASDAQ:NVDA). Lumidia’s CEO further commented that the company is in a class of its own and has no “close competitors.” Confidence is growing that the semiconductor giant will become the first tech company to reach a valuation of $4 trillion.
“Earlier this year, we said NVIDIA would become the world’s most valuable company. Yesterday, NVIDIA reached that milestone. Demand for GPU chips is strong, and companies We’re starting to see some ROI (return on investment) from early adopters.”
On Friday, October 18th, Bank of America analyst Vivek Arya reiterated his buy rating on the stock and raised his price target by $25 to $190. From Taiwan Semiconductor’s (one of NVIDIA’s major suppliers) third-quarter results to the “insane” demand for Blackwell chips cited by NVIDIA CEO Jensen Huang, analysts are looking at recent industry trends. We believe this has the potential to expand the company’s lead and generational opportunities. In addition, “undervalued” corporate partnerships with companies will also be a catalyst for further growth.
“We are also focused on increasing the presence of AI in companies where NVDA is selected as a partner (see page 10 for details).”
The bank predicts that the AI technology market will grow from $45 billion in 2023 to $117 billion this year, while Nvidia maintains a 75% market share, which is expected to surpass Nvidia’s AI compute technology by 2030. Arya believes that this will lead to a staggering $272 billion in gaming revenue. The company could generate at least $200 billion in free cash flow over the next two years.
NVDA ranks No. 3 overall on our list of AI stocks that investors should miss. While we acknowledge NVDA’s potential as an investment, we believe some AI stocks are more likely 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.
