Analyst Who Started Recommending NVIDIA (NVDA) in 2018 Says Stock Still in 'Early Stages' of AI Buildout

Dryden Pence, Pence Capital Management CIO, in a recent program on CNBC explained why NVIDIA Corp (NASDAQ:NVDA) remains his top idea despite the stock's significant growth over the past few years.

“We've had it since 2018 and continue to increase positions in it. Why? Because we're just at the early stages of the buildout of the infrastructure around AI. It's like we're just laying the track of the transcontinental railroad. Nvidia is the absolute choke point to that, and if we're going to grow AI and what it's going to do for labor productivity and every company in the world, Nvidia is going to be a key part of that. And so we think that their chips are absolutely essential to growth. We think their chips are absolutely essential to increased labor productivity, and we think that the demand signal for this is going to only get greater over time.”

Despite a $4.5 billion inventory charge related to US import restrictions for China, Nvidia expects gross margins to reach the mid-70% range by late this year due to scaling Blackwell production. NVDA bulls believe the company can easily offset losses related to China amid new products and market diversification.  Saudi Arabia's Humain plans to buy more than 200,000 AI GPUs from Nvidia, potentially generating $15 billion in sales. The UAE reportedly has an agreement for up to 500,000 GPUs. Even without China’s involvement for now, Nvidia said nearly 100 AI factories are under construction. These factories have hyperscalers deploying 1,000 GB200 NVL72 racks weekly, each with 72,000 Blackwell GPUs.

RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) was our top detractor in the quarter as investors took profits following its extraordinary performance in 2024. Despite reporting strong quarterly results, the stock pulled back amid concerns that AI-related demand may be plateauing near-term and that capital expenditures by hyperscalers could moderate. Additionally, investor anxiety rose following the announcement of sweeping new tariffs, which sparked fears of supply chain disruptions and rising input costs across the semiconductor industry. We continue to believe that NVIDIA remains one of the most strategically important companies in global computing, with best-in class GPUs, a dominant software ecosystem, and expanding opportunities in inference, networking, and edge AI. The long-term secular trend toward accelerated computing remains intact, and we believe NVDA is well-positioned to be a key beneficiary.”

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 extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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