We recently published a list of 10 AI trending stocks to watch in December. In this article, we’ll take a look at where Nvidia Corp (NASDAQ:NVDA) stands against other trending AI stocks to watch in December.
Jared Cohen, Goldman Sachs’ president of Global Affairs and co-director of the Goldman Sachs Global Institute, said in a recent episode with CNBC that AI is driving data center-driven energy demand. , said the United States needs to work with other countries. With countries through “diplomacy”.
“When you compare data centers for cloud workloads to data centers for AI workloads, data centers for AI workloads need ultra-high density. Intermittent electricity is not suitable. We need baseload power, so I think we need nuclear, coal, and natural gas. The problem is, we don’t have them in our backyard. The problem is that you can’t ship it through multiple jurisdictions. Therefore, some kind of overflow option will be needed if the United States wants to maintain its leadership in this area. No single geography can be said to be a panacea for this problem. ”
Responding to a question about whether a return to relatively cheap and reliable energy sources like coal could meet AI-driven energy demands, the analyst said that given the huge demand for electricity, the U.S. He said that there is a need to continue to consider ways to go beyond just relying on our own country’s resources.
“For the 17 gigawatts of power that’s already coming online to these data centers, we’re probably going to need to bring another 35 gigawatts or more of power online within the next two years. That’s not enough, that’s… There’s not enough time. So the United States will continue to lead in this area, but it won’t be able to lead alone.”
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Aswath Damodaran, head of evaluation, on NVIDIA (NVDA): “It’s going to be tough”
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Number of hedge fund investors: 193
Ashwath Damodaran, a finance professor at New York University’s Stern School of Business, recently spoke about Nvidia (NASDAQ:NVDA) on CNBC and said:
“I think investors are also paying more and more attention to the guidance provided by Nvidia Corp (NASDAQ:NVDA), and the negative reaction is due to the cooling of that guidance. Nvidia Corp ( NASDAQ:NVDA) I think they are trying to give investors a soft landing and lower their expectations. However, this phenomenon of every time an earnings report comes out, the stock price still goes down even though the numbers are better. We’re going to see more happen.”
Damodaran explained exactly why he thinks Nvidia Inc. (NASDAQ:NVDA) is overvalued.
“When you buy at this price, I think you expect the market for your products and services to be much larger than people expect. You need to be clear that this is the basis for your purchase. AI Even assuming Nvidia’s dominance in the chip market (which I believe it still is) and its ability to maintain these extremely high profit margins, unless something additional happens, $144. You can’t justify the valuation of it. It’s a tough call because it’s like betting that Nvidia will find another market and dominate it.”
For NVIDIA Corporation (NASDAQ:NVDA), simply beating earnings estimates is no longer enough. The stock fell despite reporting better-than-expected numbers for the latest quarter. However, analysts feel that growth is slowing. Nvidia’s fourth-quarter revenue outlook is below buy-side whispers of $39 billion, and the company expects gross margins to continue contracting next quarter. Non-GAAP gross margin for the fourth quarter is expected to be 73.5%, down from 75% in the third quarter. The cloud hyperscaler, which is NVIDIA Corporation’s (NASDAQ:NVDA) largest customer (accounting for 50% of revenue), is increasing its in-house AI chip development and collaboration with competitors such as AMD. This raises concerns about Nvidia’s medium- to long-term demand and profit growth.
Polen Focus Growth Strategy says this about NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“In a reversal from the past two quarters, NVIDIA Corporation (NASDAQ:NVDA) was the largest relative contributor for the quarter, despite a slight underperformance of -1.7%. In many ways. , NVIDIA was the epitome of increased volatility across the market. Beneath its calm surface, the company experienced a 27% drawdown and subsequent +31% rally. The company ended the quarter with a cycle of drawdowns and subsequent gains of 20%.In our view, the stock price volatility goes beyond fundamental business factors, but the company is driven by cloud service providers and large enterprises. Generative AI (“GenAI”) has benefited from increased capital spending budgets for infrastructure spending. At the same time, the company endured a slump in its stock price related to delays in its next-generation Blackwell chip and earnings expectations that were better than expected, although not as much as some investors had hoped. We continue to believe that NVIDIA is a very well-positioned company, with significant demand for chips and servers ahead of hardware demand from real-world enterprises, and a lack of recurring revenue. We are cautious about the sustainability of that growth. ”
Overall, NVDA ranks 4th on our list of trending AI stocks to watch in December. 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.
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Disclosure: None. This article was originally published on Insider Monkey.
