Bernstein analysts highlight NVIDIA's strength in generative AI training but note emerging inference market challenges for competing vendors.
This article examines where NVIDIA Corporation (NASDAQ:NVDA) stands among 30 AI News Investors Should Not Miss. The AI data center sector is experiencing significant growth and investment. Equinix recently announced that it would be forming a joint venture with GIC, a Singapore-based sovereign wealth fund, and Canada Pension Plan Investment Board, to raise more than $15 billion in capital to expand the US footprint of hyperscale data centers. Hyperscale data centers are the largest in the industry, typically developed by technology giants based in the US, and offer massive networking capacity and often consume as much power as a big city or even a small country.
Government support is further accelerating AI infrastructure development. The US government announced plans to award nearly $100 million to boost the use of artificial intelligence in developing new sustainable semiconductor materials. This funding is part of the more than $52 billion in US chip manufacturing and research grants promised by US President Joe Biden. The funding would go towards helping universities, national laboratories, and the private sector develop AI-powered autonomous experimentation for sustainable semiconductor manufacturing, with the goal of reducing time needed to develop new semiconductor materials that are less resource-intensive.
The AI stocks examined in this analysis were selected by combing through news articles, stock analysis, and press releases, with particular attention to stocks popular among hedge funds. Research has demonstrated that the market can be outperformed by imitating the top stock picks of the best hedge funds. A quarterly newsletter strategy selecting 14 small-cap and large-cap stocks every quarter has returned 275% since May 2014, beating its benchmark by 150 percentage points.
NVIDIA Corporation provides graphics, computing and networking solutions. Bernstein analysts, led by Toni Sacconaghi, recently noted that the potential for continued strong Gen-AI training dynamics was likely constructive for NVIDIA at this point, though questions around the pace and trajectory of Gen-AI inference may come more at the expense of their peers who have broadly acknowledged NVIDIA's training dominance and have hence focused on inference as the bulk of their long-term opportunity. Per Bernstein, leading LLM builders were already pre-buying NVIDIA's Blackwell to prepare for next-generation models.
Overall NVDA ranks 5th on the list of the AI stocks investors should not miss. While the potential of NVDA as an investment is acknowledged, the belief is that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. For investors seeking an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, further information can be found in the report about the cheapest AI stock.