Why Should You Buy This Growth Stock For The Next 5 Years?
We recently compiled a list of the 15 Best Growth Stocks to Buy for the Next 5 Years. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other growth stocks.
Kevin Mahn, President & CIO at Hennion & Walsh Asset Management, recently appeared on CNBC on January 6 to discuss the current market momentum and emphasize the need for investors to be selective in 2025 to find growth opportunities. He highlighted that while the MAG7 have led the market recently, their leadership may not continue. Mahn referenced historical data, noting that since 1950, there have been nine instances where the market rallied by 20% or more, with the market rising in eight of those cases. However, he pointed out that gains in the following year averaged only 3.6%, indicating a need for careful selection. He also acknowledged recent market trends, including a decline in the S&P 500’s performance and a potential shift in investor sentiment following events like the Santa Claus Rally.
He predicted a path of lower interest rates, expecting 50 basis points of cuts this year instead of the previously anticipated 100 basis points. Mahn suggested that this environment would create favorable conditions for stocks and bonds but urged investors to diversify beyond mega-cap tech stocks into sectors like biotech and aerospace. Earlier on January 3 as well, Mahn noted that after two consecutive years of gains, a third year of strong performance appears unlikely. He remarked that it seems the Grinch got in the way of the Santa Claus rally this year.
He also addressed concerns from investors tempted to time the market or sell their holdings. He warned against trying to time the market, describing it as often futile. Instead, he advocated for rebalancing portfolios to align with long-term goals and risk tolerance. He suggested that the economic landscape is changing, with lower interest rates and stagnant economic growth expected moving forward. Mahn advised investors to take profits from sectors that previously led the market and consider reallocating those funds into different areas poised for future growth. He highlighted biotech as a promising sector, noting bipartisan agreement on the need to lower drug prices. This shift could lead large-cap pharmaceutical companies to seek new revenue sources, making smaller biotech firms attractive.
Methodology
We first sifted through online rankings, and internet lists to compile a list of the top growth stocks to buy for the next 5 years. We then selected the stocks with high 5-year revenue growth and high analysts’ upside potential. From those we picked 15 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024.
Story Continues
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).
Is NVIDIA Corporation (NVDA) The Stock That Will Go to the Moon According to Reddit?
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
Number of Hedge Fund Holders: 193
5-Year Revenue CAGR: 62.43%
Upside Potential as of January 15: 30.72%
NVIDIA Corp. (NASDAQ:NVDA) is a technology company that designs and manufactures GPUs for gaming and professional markets. It also develops AI platforms, high-performance computing solutions, and self-driving car technologies to power industries like gaming, data centers, and automotive.
Bank of America maintained its $190 price target for the company recently, suggesting a 27% upside potential. This optimism is driven by the release of Blackwell GPUs, which have already secured 12 months of orders. At CES 2025, the company unveiled Project DIGITS, a personal AI supercomputer powered by the new GB10 Grace Blackwell Superchip. This compact system delivers petaflop-level AI performance while operating on standard household electricity. Project DIGITS is designed to empower researchers, data scientists, and students to develop and run large AI models locally. With 128GB of memory and up to 4TB of storage, the system is well-equipped to handle demanding AI workloads.
In Q3 2024, NVIDIA Corp. (NASDAQ:NVDA) achieved record revenue of $35.1 billion, a 94% year-over-year surge. This was driven by a 112% increase in Data Center revenue to $30.8 billion. GPU revenue has demonstrated robust growth, surging 67% annually over the past three years. This performance is fueled by the demand for computing power necessitated by advancements in AI and ML.
Manole Capital Management noted that NVIDIA Corporation (NASDAQ:NVDA) more than tripled in value over the past year, due to strong AI-related demand and continued revenue growth that exceeds market expectations. Here’s what it said in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
Overall NVDA ranks 1st on our list of the best growth stocks to buy for the next 5 years. As we acknowledge the growth potential of NVDA as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
#Buy #Growth #Stock #Years