NVIDIA (NVDA) Unveils Tech Plans to Speed AI Chip Communication

We recently published a list of 15 AI Stocks Surging on News and Analyst Ratings. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other AI stocks that are surging on news and analyst ratings.

According to an analysis by global management consulting firm McKinsey & Company, data centers are projected to require $6.7 trillion in capital expenditures worldwide by 2030 to keep up with the demand for compute power.

Those data centers that are equipped to handle AI processing loads are projected to require $5.2 trillion in capital expenditures. Meanwhile, those powering traditional IT applications are projected to require $1.5 trillion, totaling up to a staggering figure close to $7 trillion.

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The report further claims that the companies that anticipate compute power demand and invest accordingly will win the AI-driven computing era. By proactively securing critical resources such as land, materials, energy capacity, and computing power, they would have the potential to gain a significant competitive edge.

Different analysts seem to have differing perspectives on this $7 trillion figure. Wes Cummins, CEO of Applied Digital, believes that the $7 trillion estimate appears to be “on the high end.”

“If we’re talking just the next five years, I think that’s a hard number to hit, just from the practicality of building and finding enough power.”

On the other hand, Steven Lim from NTT Global Data Centers asserted that the large figure is not that far-fetched.

“If we have an idealized situation and a consistent demand curve that we see today, then $7 trillion is not out of bounds.”

While the opinions on the feasibility of this estimate may vary, one thing that is clear is that the race to build AI-ready infrastructure is accelerating. As the demand for compute power surges to new heights, the ability to scale efficiently will determine which companies will lead the AI era and which ones will fall behind.

For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.

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 373.4% since May 2014, beating its benchmark by 218 percentage points  (see more details here).

NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 223

NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. On May 19, the company revealed that it plans to sell a technology that will tie chips together, accelerating the chip-to-chip communication needed to build and deploy artificial intelligence tools.

On the same day, it launched a new version of its NVLink tech called NVLink Fusion. Nvidia will sell the NVLink Fusion to other chip designers to help build powerful custom AI systems with multiple chips linked together. Companies looking to adopt the NVLink Tech called Fusion for their custom chip efforts include Marvell Technology and MediaTek.

In other news, CEO Jensen Huang has also announced the company’s plan to build a Taiwan headquarters in the northern suburbs of Taipei.

Overall, NVDA ranks 3rd on our list of AI stocks that are surging on news and analyst ratings. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.