Investors have been taking profits from major tech stocks and pouring money into small-cap companies amid hopes of rate cuts. However, some Wall Street analysts believe that large tech and AI stocks still have room to grow. Samantha McLemore, CIO of Patient Capital, stated that the “bull market continues and the path of least resistance is higher.” She believes there is no end in sight for the bull market and that a rotation into small caps may occur in the second half of the year. Despite concerns about the AI-fueled rally potentially coming to an end, some analysts view the recent decline in tech stocks as an opportunity for long-term investors to invest in AI stocks.
NVIDIA Corp (NASDAQ:NVDA) ranks 4th on the list of Biggest AI and Tech Stock Analyst Upgrades and Downgrades in July So Far. The stock has garnered attention for its rapid run and soaring valuation, leading some on Wall Street to become uneasy. New Street Research downgraded NVIDIA to Neutral from Buy and set the stock’s price target at $135, citing concerns about the company’s long-term outlook. Aswath Damodoran, a valuation expert, has also been skeptical about NVDA, expressing doubts about the stock’s valuation. However, Oppenheimer’s Rick Schafer raised NVIDIA’s price target to $150 following a 10-1 stock split, showing confidence in the chipmaker.
NVIDIA Corp has been a key player in the AI-fueled rally, with its shares gaining about 206% over the past year. Analysts like Barclays Tom O’Malley have given bullish comments on the stock, pointing out potential growth opportunities from countries building up their AI capabilities. NVIDIA’s latest product announcements and plans demonstrate its commitment to powering its growth engine through new AI architecture and powerful chips that outperform competitors. With the company set to launch new products in the second half of the year, analysts believe NVIDIA’s growth expectations are justified.
Alger Focus Equity Fund expressed optimism about NVIDIA Corporation in its Q1 2024 investor letter, highlighting the company’s leading position in graphics processing units for various end markets. According to the fund, NVIDIA’s computational power is critical for AI adoption and is well-positioned to benefit from growing AI data center workloads. Overall, while NVIDIA Corp may show promise, some investors believe that AI stocks as a whole hold greater potential for higher returns within a shorter timeframe. For investors seeking AI stocks that are promising and trade at attractive valuations, exploring other options beyond NVDA may be worthwhile.
The article emphasizes the significance of monitoring the activity of hedge fund investors in AI stocks, as their top stock picks have shown the potential to outperform the market. By imitating the strategies of the best hedge funds, investors can capitalize on opportunities presented in the AI sector. While NVIDIA Corp remains a notable player in the AI market, there may be other AI stocks with strong growth potential that offer more attractive valuations. This outlook suggests that the AI sector continues to be a focal point for investors seeking opportunities for growth and profitability in the tech industry.
