NVIDIA’s Potential in the Tech Sector
This article examines NVIDIA Corporation (NASDAQ:NVDA) in relation to other tech stocks characterized by high upside potential. The analysis incorporates insights from market research, expert analyst ratings, and hedge fund activity.
Market Outlook
According to Forrester Research, Inc., the US real GDP is forecasted to grow by 2.7% in 2025 despite persistent inflation. Furthermore, US tech spending is expected to surge by 6.1%, reaching an impressive $2.7 trillion. Software spending also projects significant growth, with an anticipated increase of 10.7% in 2025. Companies are increasingly leveraging cloud and GenAI technologies to navigate escalating cybersecurity risks and foster innovation.
AI’s Impact on Tech
Goldman Sachs highlights the significant gains the ‘Magnificent 7’ US stocks have experienced over the past two years, largely due to the expansion of AI infrastructure. Sung Cho, co-head of US Fundamental Equity at Goldman Sachs Asset Management, foresees benefits for data, security, and software companies that effectively integrate AI. Simultaneously, as the Federal Reserve considers rate cuts, smaller tech companies could experience a favorable macroeconomic environment.
UBS underscores AI’s role in advancing the tech sector’s growth. Since the release of ChatGPT in November 2022, the total market capitalization of companies listed on the NASDAQ tech exchange has increased to approximately $13.5 trillion, with AI directly contributing to about two-thirds of that growth. Investments in AI-based infrastructure are viewed as vital for driving profitable business models.
UBS estimates that the four largest US tech corporations will invest around $280 billion in AI this year. This heightened AI usage across multiple industries is expected to optimize value creation processes, leading to productivity gains, particularly in areas like robotics and automation, which are expected to achieve sales volumes of roughly $350 billion in 2025. Humanoid robotics present a particularly interesting area for technological development.
Methodology
The methodology employed to identify tech stocks with high upside potential involved screening based on a broad sector focus. The stocks assessed had an average upside potential of at least ~30% as of February 28, with a ranking based on ascending order of their average upside potential. Additionally, hedge fund sentiments from Q4 2024 were considered.
NVIDIA Corporation (NASDAQ:NVDA)
Average Upside Potential: ~40%
Number of Hedge Fund Holders: 223
TD Cowen analyst Joshua Buchalter maintains a “Buy” rating on NVIDIA Corporation (NASDAQ:NVDA), based on factors such as the robust demand for Blackwell products and the company’s advancements in AI infrastructure. Bernstein’s Stacy Rasgon also holds a “Buy” rating, establishing a price objective of $185.00. NVIDIA has increased the large-scale production of Blackwell AI supercomputers, with continued advancements in agentic AI and physical AI.
For Q1 2026, NVIDIA Corporation (NASDAQ:NVDA) anticipates revenues of $43.0 billion, plus or minus 2%. Baron Funds, in their Q4 2024 investor letter, highlighted NVIDIA’s strong performance, particularly its record data center revenue, driven by demand for Hopper GPUs. The investment management company points to the continued progress of AI models and the expansion of AI adoption across various industries.
Overall, NVIDIA is positioned 5th on a list of tech stocks with high upside potential, although the article suggests there are more undervalued AI stocks offering higher returns.
