We recently published a list of the 12 best stocks to invest in over the next three months. In this article, we’ll take a look at how NVIDIA Corporation (NASDAQ:NVDA) stands compared to other stocks that are great to invest in over the next three months.
On November 13, Morgan Stanley released an analysis highlighting potential risks to the “Trump trade,” which refers to market optimism following Donald Trump’s decisive victory in the 2024 U.S. presidential election. did.
Investors poured money into small-cap stocks, financial stocks and cryptocurrencies in hopes of lower taxes and less regulation. However, bond markets expressed caution, and 10-year Treasury yields soared. Concerns about unfunded tax cuts and ballooning U.S. debt weighed on bond market sentiment, while a strong dollar weighed on emerging market currencies.
Despite current market momentum, the bank’s Global Investment Committee advises investors to approach these trends with caution as 2025 approaches. They identify three main risks to the sustainability of this rise.
First, stock valuations are extremely difficult. The report points out that rising interest rates could increase borrowing costs and put pressure on companies’ profitability. Inflation-adjusted yields on the 10-year Treasury note have risen to about 2%, which has historically been associated with lower price-to-earnings ratios. Currently, this multiple is 23x, well above historical norms.
Second, corporate earnings targets for 2025 are ambitious and may be difficult to achieve. Forecasts call for earnings growth of 15%, but this seems too optimistic given the current single-digit earnings growth and weak productivity growth. While some sectors, such as traditional energy and financials, may benefit from regulatory clarity under President Trump’s leadership, headwinds such as higher borrowing costs and a stronger dollar may weigh on multinationals. It can be a challenge. Additionally, potential tariffs could increase production costs and put additional pressure on manufacturers.
Finally, policy timing poses significant risks. The order of the Trump administration’s policies will be important. Measures such as deregulation and tax cuts may stimulate growth, while inflationary policies such as tariffs and immigration restrictions may offset these benefits. Such actions could raise consumer prices, slow labor force growth, and disrupt key industries such as agribusiness and services.
Given these risks, the bank advises investors to consider locking in profits in high-performing stocks and selling unperforming stocks to offset tax liabilities. They see potential opportunities in emerging markets where large-cap, mid-cap growth and currency volatility create attractive entry points.
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Also read: 10 nuclear energy stocks to invest in now and 10 most profitable renewable energy stocks right now.
In a Nov. 20 interview with Bloomberg, Oaktree Capital Management co-chairman Howard Marks discussed navigating global market uncertainty and investment strategies amid geopolitical and economic turmoil. He shared his insights.
Marks emphasized the inherent unpredictability of markets and cautioned against overreacting to short-term events such as geopolitical tensions, changes in U.S. policy and macroeconomic changes. Instead, he advocated a disciplined, bottom-up approach to investing that focuses on the intrinsic value and fundamental performance of individual companies.
Marks cited high valuations in the U.S. stock market, noting that while prices may have risen relative to historical norms, he believes they are overvalued rather than outrageously expensive.
Marks discusses the difficulty of predicting how things will unfold and how markets will react to geopolitical developments, including former President Trump’s rhetoric and potential policy implications. emphasized. He emphasized the importance of maintaining a long-term perspective rather than trying to time the market based on speculation. He pointed to historical examples where predictions of major global events could have led to expensive investment mistakes.
The financial landscape is currently being shaped by policy changes, evolving market trends, and global uncertainty. Investors should tread carefully, focus on long-term strategies, and adopt disciplined decision-making to avoid potential risks. With this in mind, let’s take a look at the 12 best stocks to invest in over the next three months.
A close-up view of a colorful high-end graphics card connected to a gaming computer.
our methodology
To create a list of the 12 best stocks to invest in over the next three months, we used Insider Monkey’s hedge fund database to create a list of the 12 most popular among elite money managers as of Q3 2024. We ranked the brands. The list is sorted as follows: Ascending order of hedge fund sentiment.
Why do we care what hedge funds do? 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 ).
Number of hedge funds: 193
NVIDIA Corporation (NASDAQ:NVDA) is a global leader in graphics processing technology, driving innovation in gaming, AI, data centers, and autonomous vehicles. The company’s GPUs are the gold standard in performance for compute-intensive applications.
NVIDIA Corporation’s (NASDAQ:NVDA) journey from gaming-focused GPU maker to artificial intelligence (AI) market leader culminated with its induction into the Dow Jones Industrial Average (DJI). On November 6th, the company was added to DJI, replacing Intel. This milestone, coupled with the upcoming launch of the highly anticipated Blackwell processors, sets the stage for the company’s continued growth.
The impending release of NVIDIA’s Blackwell processors will further solidify the company’s dominance in the AI chip market. Blackwell GPUs are in high demand among companies like OpenAI, Microsoft, and Meta who are building AI datacenters to support their products. Priced between $30,000 and $40,000 each, these GPUs are already being delivered to data centers and industrial customers for AI applications, with consumer availability expected in 2025. In an interview with CNBC, CEO Jensen Huang said: “Blackwell is insane,” he said, stressing that “everyone wants to have the most, everyone wants to be the best.”
Overall, NVDA ranks 5th on our list of the best stocks to invest in for the next three months. While we see NVDA’s growth potential, 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.
