Yahoo Finance NVIDIA Corporation (NYSE:NVDA) VS AMD: Who Will Win the AI PC Race?
We recently published a list of the 8 Best AI PC Stocks to Buy Now. Since NVIDIA Corporation (NYSE:NVDA) ranks 2nd in the list, it deserves a deeper look.
When the AI revolution began with the launch of ChatGPT, no one would have thought that down the road it would bring a huge growth catalyst for the PC industry, notorious for its cyclical nature and unpredictability. Fast forward to today, everyone is talking about PCs equipped with AI-focused equipment capable to process generative AI workloads. But in just a matter of few months why did the market feel the need for AI PCs? It all boils down to costs. GPT-4 costs $0.03 per 1,000 tokens for prompts and $0.06 for completion according to Microsoft’s estimates. Consider millions of users prompting LLMs from their phones and computers. The costs of scaling such systems are not feasible. That’s why the market thought allowing users to process AI-intensive workloads natively instead of using the Cloud is the future. And that caused the AI PC boom. Tech market analyst firm Canalys says AI PC shipments are expected to soar to 170 million in 2027, from 25 million in 2022. That would be a 60% share of the total PC market. The firm also expects AI PC shipments to double from 2023 to 2024 and double gain from 2024 to 2025.
Canalys also expects vendors to ship 205 million AI-capable PCs in 2028, representing a CAGR of 44% from 2024 through 2028.
For this article we scanned Insider Monkey’s database of 919 hedge funds and picked 8 AI PC stocks with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
NVIDIA Corporation (NYSE:NVDA)
Number of Hedge Fund Investors: 186
NVIDIA Corporation (NYSE:NVDA) is a no-brainer name when it comes to the best AI PC stocks, thanks to NVIDIA Corporation’s (NYSE:NVDA) wide range of chips it’s providing to power AI workstations and laptops. NVIDIA Corporation (NYSE:NVDA) is specifically targeting the AI PC market with NVIDIA Corporation (NYSE:NVDA) GeForce RTX™ GPUs and NVIDIA AI Enterprise software. NVIDIA Corporation (NYSE:NVDA) recently teased RTX AI laptops at Computex 2024.
While NVIDIA Corporation (NYSE:NVDA) is one of the best AI PC stocks based on hedge fund sentiment, many circles have voiced concerns over NVIDIA Corporation’s (NYSE:NVDA) valuation and whether the stock would be able to continue on its growth trajectory. NVIDIA Corporation (NYSE:NVDA) expects $28.0 billion in revenue for the second quarter of fiscal 2025, which was a sharp decline in growth rate according to many. Analysts also believe competitive threats to NVIDIA Corporation (NYSE:NVDA) are growing. AMD Ryzen AI 300 Series processors are powering many AI PCs developed by partners which include Microsoft. Microsoft CEO Satya Nadella recently praised AMD and said his company was “excited” to partner with AMD to deliver these new Ryzen AI powered Copilot+ PCs. Microsoft will be using MI300X Accelerators to power Azure’s OpenAI workloads. NVIDIA Corporation’s (NYSE:NVDA) long-term growth of its Blackwell chips is also under threat from Chinese competitors like Huawei.
While NVIDIA Corporation (NYSE:NVDA) is still one of the top AI picks of hedge funds and Wall Street, there are some lesser known AI stocks with long-term growth potential and low valuations. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our top contributor in the quarter following blowout 4Q results and 1Q guidance driven by strong data center sales. The company reported quarterly revenue of $22.1 billion, up 265% year-over-year, and EPS in the quarter of $5.16, up 487% year-over-year and 12% ahead of expectations. Revenue guidance for 1Q of $24 billion was 8% above very high expectations. The artificial intelligence arms race kicked-off by ChatGPT and Alphabet’s Bard, among others, has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following recent results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
Overall, NVIDIA Corporation (NYSE:NVDA) ranks 2nd on Insider Monkey’s list titled 8 Best AI PC Stocks to Buy Now. While we acknowledge the potential of NVIDIA Corporation (NYSE:NVDA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA Corporation (NYSE:NVDA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
