Nvidia's AI Investment Strategy: CoreWeave Dominates Portfolio as AI Chip Demand Surges

Jensen Huang bets big: This AI stock now makes up a whopping 78% of Nvidia's entire investment portfolio

After a bumpy beginning to the year, Nvidia's stock has now increased almost 40% since April and one of the hidden reasons is its own investment in a firm that may be driving the momentum, as per a report. One of Nvidia's biggest holdings is CoreWeave, a fast-emerging AI startup that's come to the spotlight since its well-publicized IPO on March 28, 2025, as per The Street. CoreWeave's stock has surged over 100%, and Nvidia has benefitted from it as it owns over 24 million shares of the firm, valued at an estimated $896 million, as shown in 13F filings monitored by WhaleWisdom. That investment now constitutes 78% of Nvidia's entire equity holdings, according to the report. ALSO READ: Kevin O'Leary, one of Donald Trump's biggest allies, says top retailers will not listen to the president and will hike prices following tariffs Other assets in Nvidia's portfolio are British semiconductor company Arm Holdings and digital infrastructure company Applied Digital Corp, as per The Street. Both have done well over the past few weeks, but their increases are modest versus the latest run by CoreWeave, according to the report. CoreWeave was founded in 2017 as a crypto mining company, but now the company provides cloud-based graphics processing unit (GPU) infrastructure for clients with AI and machine learning projects, as per The Street. According to the company's webpage, it helps manage "the complexities of AI growth to make supercomputing accessible," as per the report. While, Nvidia remains fully behind the hyperscaler startup and has invested in CoreWeave since April 2023, as per The Street. The chipmaker, in its annual report, gave more context on its investments, "We acquire and invest in businesses that offer products, services, and technologies that we believe will help expand or enhance our strategic objectives... Further, our investments in publicly traded companies could create volatility in our results and may generate losses up to the value of the investment," reported The Street. How much of Nvidia's portfolio is invested in CoreWeave? Nvidia owns over 24 million shares of CoreWeave, which now represents 78% of its entire equity portfolio. What has been the performance of CoreWeave's stock? CoreWeave's stock has skyrocketed by more than 100% since its IPO on March 28, 2025, which has led to Nvidia's stock gains, as per The Street.

These AI Stocks Soared 270% to 1,400% in 5 Years, but Billionaires Keep Buying | The Motley Fool

Artificial intelligence (AI) is a game-changing technology, where the right stocks could earn investors handsome gains. But as with any technology that comes along, investors will need to watch for companies that fail to live up to the hype. This is where following the stock picks of billionaire investors could prove very helpful. These investors have had successful investing careers, and they generally don't invest in a company until they have completed exhaustive research into its competitive position, risks, and return prospects. Fortunately, billionaire fund managers are required to report their holdings on Form 13F every quarter. The latest round of 13Fs revealed prominent billionaires still buying shares of two high-flying chip stocks in the first quarter. Taiwan Semiconductor Manufacturing (TSM 2.44%) is the leading chip manufacturer in the world. It controls more than 60% of the global foundry market, as it makes chips for leading chip companies, including Nvidia (NVDA 0.83%). Growing demand for chips used for AI workloads in data centers has helped send the stock up 279% over the past five years, and its run may not be over. Three notable billionaires were buying shares in the first quarter. David Tepper of Appaloosa Management, Stephen Mandel of Lone Pine Capital, and Chase Coleman of Tiger Global Management were adding to their firm's stakes. The company's strong first quarter amid uncertainty over the economy is pointing to tremendous momentum in the AI market. Demand for AI chips remained robust in the first quarter. Revenue and earnings grew 35% and 60% year over year, and TSMC is making significant investments in expanding capacity to support long-term demand. TSMC recently unveiled its A14 logic process technology, representing a step forward from its current 2-nanometer (N2) process. The A14 delivers a 15% increase in performance with a 30% power savings over the N2 and is scheduled to enter production in 2028. These billionaires are making a bet that TSMC is benefiting from sustainable demand in the AI market. They are obviously aware of the semiconductor industry's historical cyclicality, and some of that cyclical nature revealed itself last quarter, as not all the markets that TSMC sells into are experiencing strong demand right now. For example, seasonal softness in smartphone demand caused TSMC's revenue to fall 5% over the previous quarter. It also experienced a small setback in chip production following a recent earthquake that disrupted operations. Over the long term, the increasing use of more technologically advanced devices and data centers for AI should create opportunity for TSMC. The growing need for more advanced chips is why the stock has delivered market-beating returns over the last decade, and it could repeat that performance. TSMC forecasts AI chip sales to double in 2025 and grow at an annualized rate of 40% through 2028. Considering this forecast, the stock looks compelling, trading at a reasonable 21 times this year's earnings estimate, while analysts expect earnings to grow at an annualized rate of 21%. TSMC's long-term outlook for AI chip sales bodes well for Nvidia. Its graphics processing units (GPUs) are the gold standard in the AI chip market. The stock has rocketed 1,400% over the past five years, yet a few billionaires still see upsides. In the first quarter, Chase Coleman added to his firm's stake, while Daniel Loeb of Third Point established a new position in the stock. Nvidia is coming off an incredible year, where its revenue more than doubled to $130 billion. Based on a strong outlook for Nvidia's new chips going into production, analysts expect the company's revenue to increase by 53% to nearly $200 billion in the current fiscal year. Its new Blackwell computing platform designed for the most advanced AI workloads is already raking in billions in revenue, and the company is racing to raise supply to meet demand. Even Nvidia's automotive chips for self-driving cars are seeing strong demand, with revenue expected to triple this year to $5 billion. One risk for Nvidia is companies pursuing cheaper alternatives than buying its GPUs. Some of Nvidia's customers, including Amazon and Alphabet's Google, have invested in their own chips for AI. Custom chip solutions can perform more efficiently at specific computing tasks and save money over Nvidia's general-purpose GPUs that can cost tens of thousands of dollars per unit. Coleman and Loeb are obviously betting that data centers will continue to need Nvidia's GPUs. With Nvidia's software, companies can tailor these GPUs to work with a number of use cases. Nvidia just made a flurry of announcements at the recent Computex conference that show its GPU technology becoming more entrenched in companies' AI investment plans. For example, Nvidia and Microsoft are working together on agentic AI, an advanced form of AI that can make decisions without a human prompt. Perhaps the most important announcement from Nvidia was the introduction of NVLink Fusion, which will allow customers to integrate chips from other chipmakers alongside Nvidia's GPUs in data centers. This strategy could ultimately expand the addressable market for Nvidia's chips, while protecting its lead in the AI market. Despite these positive developments, the stock trades at a forward price-to-earnings ratio of 30, which seems on the low side for a company that analysts expect to grow earnings at a 35% annualized rate. Given Nvidia's lead in GPUs, the stock could hit new highs this year and still deliver market-beating returns over the next few years.

Prediction: This Artificial Intelligence (AI) Stock Will See the Biggest Comeback in the Second Half of 2025 | The Motley Fool

Shares of Nvidia are at breakeven for the year, but the stock looks poised for an epic breakout. If you invested in artificial intelligence (AI) stocks at virtually any point during 2023 or 2024, chances are you have seen some gains. But if you've been investing in AI stocks this year, well, that's a different story. Throughout 2025, a number of things have taken their toll on the technology sector, dampening enthusiasm around the AI trend. In the beginning of the year, Chinese start-up DeepSeek shocked investors around the world after claiming it could build and train AI models at parity with ChatGPT and other leading platforms but at a fraction of the cost. More recently, President Donald Trump's tariffs and the subsequent trade negotiations have brought a wave of uncertainty around how these policies will impact the prospects for high-growth businesses. This is all to say that investors have been presented with a lot of uncertainty this year. And one stock that has been particularly punished during this period is Nvidia (NVDA -0.99%). At one point, shares of Nvidia had dropped 30% year to date, resulting in a market cap loss of nearly $1 trillion. Nvidia stock is back at breakeven for the year as of mid-May, but for the remainder of 2025, Nvidia stock should soar and ultimately reclaim its position as the most valuable business in the world. When Nvidia reported earnings for the fourth quarter and full year of fiscal 2025 (ended Jan. 26), management provided the following financial guidance: first-quarter revenue of $43.0 billion (plus or minus 2%) and gross margin of 70.6% (plus or minus 50 basis points). While financial guidance can be a helpful tool to hold management accountable, I would not be overly focused on these figures right now. After Nvidia's management made these forecasts, the world was introduced to new tariff policies, and export controls around China -- a core market for Nvidia -- remain a fluid situation. This is all to say that if Nvidia misses its guidance or only achieves the lower end of its financial outlook, there are clear reasons for such an outcome. Longer-term, though, I'm quite confident in Nvidia's growth prospects. Over the last several weeks, investors have gotten a preview into the roadmaps for a number of other leading tech companies -- many of which use Nvidia's chips. Microsoft, Amazon, and Alphabet did not lower their capital expenditure (capex) forecasts for this year -- collectively budgeting more than $250 billion in spending, much of which will go to AI infrastructure. Meta Platforms even raised its capex outlook for the year to as much as $72 billion. To me, these trends suggest the AI industry's biggest players are expecting robust demand for their respective products and services, and that means demand for Nvidia's chips should remain intact. Even if Nvidia's Q1 report ends up appearing underwhelming, my prediction is that its outlook will be strong. Right now, the stock's forward price-to-earnings (P/E) valuation is well below its peak levels from the past year. Investors must avoid focusing excessively on the short-term headwinds Nvidia is facing and losing sight of the big picture. So long as big tech is spending on AI infrastructure, Nvidia's dominant market share means the company is capturing a sizable chunk of that spending. For these reasons, the bullish narrative around this AI darling should recharge in the second half of the year.

Billionaire Philippe Laffont Has Cumulatively Sold 83% of Coatue's Nvidia Stake and Is Piling Into Wall Street's Hottest Artificial Intelligence (AI) IPO | The Motley Fool

Coatue Management's billionaire chief is swapping out the brains of AI-powered data centers for a newly public AI stock with scorching-hot growth potential. May has been a data-packed month for investors. Between earnings season, a steady flow of economic data releases from the government, and the Federal Open Market Committee's federal funds rate decision, there's been a lot to unpack. But arguably the most important data release of the quarter occurred one week ago, on May 15. This was the deadline for institutional investors with at least $100 million in assets under management (AUM) to file Form 13F with the Securities and Exchange Commission. A 13F provides investors with a way to track which stocks and exchange-traded funds (ETFs) Wall Street's most prominent money managers have been buying and selling. Though Berkshire Hathaway's Warren Buffett is the most followed of all asset managers, he's far from the only billionaire investor known to deliver outsized returns and move markets. For instance, billionaire fund manager Philippe Laffont of Coatue Management, who's overseeing $22.7 billion in AUM, has a rich track record of outperformance. Laffont is also known for his love of high-growth stocks -- especially those in the tech sector. Based on Coatue's first-quarter 13F, its billionaire chief continued to be a seller of the world's leading artificial intelligence (AI) stock, Nvidia (NVDA -1.82%), but absolutely piled into Wall Street's hottest AI-initial public offering (IPO) of the year. Taking into account that Nvidia completed a 10-for-1 forward split in June 2024, Coatue's position in Wall Street's AI darling peaked at 49,802,020 shares in the March-ended quarter of 2023. Over the last two years, Laffont has been paring down this position with regularity. During the first quarter of 2025, Laffont's fund dumped 1,460,653 shares of Nvidia stock, which represents a sequential quarterly decline of about 15%. But over the last eight quarters, Coatue's billionaire boss has overseen the sale of 41,256,185 cumulative shares of Nvidia, representing 83% of the fund's original stake. To be objective, Nvidia has done a lot of things right to get to where it is now. Its Hopper (H100) graphics processing unit (GPU) and successor Blackwell GPU architecture have run circles around the competition, in terms of compute ability. Nvidia's hardware maintains a near-monopoly-like share in enterprise AI data centers. Overwhelming demand for Nvidia's GPUs also boosted its pricing power. With the Hopper and Blackwell commanding a premium over all other GPUs, it's no surprise that Nvidia's gross margin surpassed 70%. But not everything is perfect for Nvidia -- and Laffont's trading activity suggests it. Despite Nvidia having superior hardware, competitive pressures are beginning to weigh on its margins. In addition to direct external competitors ramping up production of their AI-GPUs, many of Nvidia's top customers by net sales are internally developing chips they'll use in their own data centers. The cost and accessibility advantage of relying on internally produced AI solutions could realistically result in Nvidia losing out on valuable future data center real estate. The presence of new external and internal competition is also working to minimize the effect of AI-GPU scarcity. This has been Nvidia's primary competitive edge for two years, and it's the core reason its gross margin surged to as high as 78.4% one year ago. With its gross margin expected to decline, yet again, in the fiscal first quarter, it's clear that Nvidia's biggest advantage is withering. The other big-time concern for Nvidia shareholders is the likelihood of an AI bubble forming and bursting. Including the proliferation of the internet in the mid-1990s, there hasn't been a game-changing innovation in more than three decades that's avoided a bubble-bursting event early in its expansion. The fact that most businesses haven't optimized their AI solutions, and in many instances aren't generating a positive return on their AI investments, strongly signals that investors have (again) overestimated the early innings utility and adoption rate of a next-big-thing trend. With more than 90% of Nvidia's net sales coming from its data center segment in the fiscal fourth quarter of 2025 (ended Jan. 26, 2025), a bursting of the AI bubble would be disastrous for its stock. Although Laffont was a seller of a lot of high-growth tech stocks during the March-ended quarter, there was one artificial intelligence company that caught his attention in a big way -- and it only debuted as a public company days before the end of the first quarter! Arguably no stock was purchased more aggressively in the opening frame of 2025 by Coatue's billionaire chief than Nvidia-backed AI-data center infrastructure company CoreWeave (CRWV 18.79%). In its two business days as a publicly traded company in the first quarter (the company's IPO was Friday, March 28), Laffont scooped up 14,402,999 shares, which vaulted it to Coatue's 16th-largest holding by market value. The allure of CoreWeave for Laffont almost certainly has to do with the insatiable enterprise demand for AI computing resources. CoreWeave has purchased 250,000 Hopper chips from Nvidia, which is no small investment. In return, the company can lease out its AI infrastructure and services to clients, with the amount it generates in sales all dependent on things like demand, the services rendered, and the GPUs needed to complete a task. Coatue's billionaire money manager is likely also impressed with CoreWeave's expected growth ramp. Keeping in mind that consensus growth estimates for relatively early stage businesses are often fluid, CoreWeave's sales are projected to catapult from a reported $1.92 billion in 2024 to an estimated $19.66 billion come 2028. The company also announced a strategic deal with OpenAI that tacks on $11.2 billion in its revenue backlog. The numbers on paper absolutely paint an exciting picture for CoreWeave. But the real world doesn't always pan out as things do on paper. To begin with, CoreWeave's net losses are accelerating at the same staggering rate as its sales. As an early stage business, the company had to rely on debt financing to fund its GPU purchases. Last year, CoreWeave had nearly $361 million in net interest expenses. Its annual run in 2025 for net interest expense, based on its recently reported first quarter, is almost $1.06 billion! Investors should expect steep losses as CoreWeave's revenue ramp-up continues. Another sizable concern for CoreWeave, which might actually trump its rapidly widening net loss, is Nvidia's accelerated innovation cycle. Nvidia plans to bring a new high-powered AI chip to market roughly once per year. This means that CoreWeave's predominantly Hopper GPU-powered data centers could quickly become obsolete -- or at the very least, it could substantially weaken the company's pricing power for its services. Lastly, CoreWeave would almost certainly be adversely affected by an AI bubble forming and bursting. Until artificial intelligence matures as a technology, the threat of businesses paring back their AI infrastructure spending remains a tangible concern.

3 No-Brainer Artificial Intelligence (AI) Growth Stocks to Buy With $250 Right Now | The Motley Fool

You can still find good values among AI stocks even after their strong price recovery in recent weeks. With more and more capital going into artificial intelligence (AI) development and infrastructure, and investors growing increasingly excited about the tech's potential impact on various businesses, stocks connected to the trend have been some of the market's biggest winners over the last two and a half years. Despite that rapid growth, many of those stocks could still have plenty of room to keep climbing. The world's biggest tech companies plan to spend hundreds of billions of dollars on building out data centers this year alone. And from the way their leadership teams talked on their most recent earnings calls, most of them don't expect to slow that capital spending down anytime soon. Of course, not every company will come out ahead from their investments in AI. And even if a company looks poised for financial success, the stock still needs to offer good value for investors. If you have a small amount available to invest at the moment, like $250, finding a good stock to buy could be even harder. I've identified three AI stocks you can buy now with just $250 that can help you capitalize on the next phase of growth in the industry. Amazon (AMZN 0.92%) is the largest public cloud computing infrastructure provider in the world. That said, it was caught flatfooted when the AI trend kicked off. It has worked hard to catch up with its competitors by focusing on providing a diverse range of AI services and making a strategic investment in Anthropic, a leading developer of foundational AI models. Now, when it comes to everything from raw computing power to platforms to build new large language models on top of, Amazon Web Services can meet clients' needs. Amazon is also working on its own purpose-built AI accelerator chips for both training and inference. It has seen strong demand for its custom silicon, and says customers are seeing significantly better price performance for both training and inference with its chips compared to the leading GPUs on the market. Importantly, Amazon expects to lay out more than $100 billion this year in capital expenditures, mostly focused on AI data centers. It wouldn't be spending that much if it didn't see strong demand for computing power. Management reiterated during its most recent earnings call that it remains capacity-constrained, so as more of its new data centers come online later this year, revenue growth for Amazon Web Services (AWS) should accelerate. Outside of AWS, the company continues to operate a massive online retail business. It has seen strong margin expansion over the last few years as a result of optimizing its logistics network and scaling its advertising business. While Amazon's massive spending on data centers is cutting into its free cash flow, the long-term trend remains positive. Despite its huge step up in investments over the last year, free cash flow still topped $25 billion over the trailing 12 months. With the stock trading at around $200 per share -- more than 15% below the all-time high it reached earlier this year -- it looks like a no-brainer buy. Tencent (TCEHY -1.24%) is the company behind WeChat, the massively popular Chinese super-app. If you took WhatsApp, combined it with Facebook, added Netflix and Spotify, built an app store on top of that, and extended payments from the app store to other websites and even physical stores, you'd have something that looks like the all-in-one app that is WeChat. Tencent also has a massive mobile gaming business, and it's the third-largest cloud computing provider in China. It has already seen the benefits of putting machine-learning AI algorithms to work in its advertising business. More targeted content leads to higher engagement rates and supports higher ad prices. That has been reflected in the strong gross margin expansion for its value-added services over the last two years. Tencent has also rolled out AI tools for marketers to improve their ad generation. With its strong operating leverage, it is reinvesting its excess capital into AI development to further improve ad targeting and content recommendations, and expand its cloud computing infrastructure. But it has not yet laid out timelines for monetizing newer features like its AI chatbot within WeChat, its AI-powered search engine, or its image generator. As a result, management says it expects its increased AI spending to hold back its margin expansion for the foreseeable future. Still, the long-term benefits should be worth it for investors. Tencent stock does come with some meaningful risks, not least of which is its position as a Chinese company. Management has long dealt with assertive regulators in Beijing exercising control over its industry and operations. Still, increasingly tight regulations could strangle Tencent's advancements. Even after considerable price appreciation this year, Tencent stock trades for less than 20 times trailing earnings. Given that it's trading at around $66 per share, investors with about $250 to deploy now could add three or four shares of the stock to their portfolios. Somebody has to manufacture and package all of the high-end chips that go into AI data centers, and more often than not, that somebody is Taiwan Semiconductor Manufacturing (TSM 2.44%), aka, TSMC. It commands roughly two-thirds of the third-party semiconductor fabrication market, and it's responsible for a particularly large share of those semiconductors made with the most advanced processes, which are required for high-end AI accelerator chips. As a result, the Taiwan-based company has been one of the biggest beneficiaries of the boom in AI spending, and it should continue to benefit well into the future. Management expects revenue from AI accelerators to double in 2025 and grow at an average annual rate of 40% through the end of the decade. That supports its long-term view that its total revenue will grow at a 20% compound annual rate between 2025 and 2029. Meanwhile, the company should be able to maintain its high gross margins. TSMC benefits from a virtuous cycle. Its industry-leading technology and scale make it the top foundry choice for any company that's designing cutting-edge chips for data centers or personal computing devices. As a result, TSMC collects a lot more revenue than its competitors, which gives it more money to invest in research and development. In turn, that ensures it can maintain and even extend its technological lead and continue winning more contracts. TSMC has been in the crosshairs of President Donald Trump's tariffs, and the ongoing trade policy changes he is engaging in present a major risk for the company. However, strong demand for AI chips will likely limit the impact on TSMC's non-AI business, and since AI is driving a significant portion of its growth these days, the overall impact should remain manageable. After the stock touched a 52-week low in April due to investors' tariff-related fears, it has recovered and is trading in the range it was in last fall. But it's still a relative bargain. Investors can buy shares for just 20 times forward earnings, as its price remains below $200 per share.

Where Will Nvidia Be in 3 Years? | The Motley Fool

Nvidia (NVDA -0.99%) stock has seen some volatile trading lately. After sinking in response to concerns about the demand outlook for advanced artificial intelligence (AI) hardware and new import taxes that threatened to destabilize global trade, the company's share price benefited from explosive rebound momentum after the Trump administration announced a softening of its tariff policies. With Nvidia stock surging following the Trump administration's shift on tariff policies, investors may be wondering whether it's now too late to buy into the stock. Read on for a look at what two Motley Fool contributors think Nvidia's prospects are over the next three years. Keith Noonan: Nvidia has been at the forefront of advanced graphics processing units (GPUs) and accelerators since the AI revolution started rapidly gaining steam a couple of years ago. Thus far, there's little indication that competitors, including Advanced Micro Devices and Intel, are catching up to the company. Meaningful advances for Chinese designers, including Huawei, could emerge at some point, but it looks like demand for those processors will be largely concentrated in China and its allies. With AI potentially providing major competitive advantages for both companies and governments, there will continue to be massive incentives to invest heavily in the kind of high-powered hardware that Nvidia has a big edge in. Even better, the company has strengthened its competitive moat through its CUDA software platform, which helps developers get the most out of AI processors. This will likely make it very difficult for AMD, Intel, and other players to beat Nvidia in the space. With Nvidia posting great sales and margins, it's also got more flexibility to experiment in other potentially explosive categories, including agentic AI software and robotics. Rivals, including AMD and Intel, are having a hard enough time competing in the AI processor space, and that hypothetically leaves them with less flexibility when it comes to spending big to branch outside their core competencies. With significant macroeconomic and geopolitical uncertainty on the horizon, there's a good chance that Nvidia stock will continue to see significant volatility this year. On the other hand, the company's strength in the AI processor space should continue to help Nvidia score strong sales and earnings and also facilitate pushes into other business categories. Nvidia still faces some substantial risks over the next three years, but I think the most pressing risk factors for the stock are potential macroeconomic and geopolitical dynamics that extend to the market at large. Jennifer Saibil: Nvidia had been a winning stock for years before it became a household name in the age of generative AI. Some uncertainties about the future, however, make it harder to determine where it could be in three years and whether it's worth buying today. It was a success in the past for its gaming products, but it became a household name thanks to its dominant position in the quickly expanding generative AI sector. Explosive demand for its GPUs continues, with sales jumping 78% year over year in fiscal 2025's fourth quarter (ended Jan. 26) to $39 billion. Looking ahead, management guidance called for sales to increase 65% in fiscal 2026's first quarter. CEO Jensen Huang said the continuing incredible demand can be attributed to the company's newest generation of AI products under the Blackwell name. Management noted how far-reaching and multilayered its opportunity is. Its products now serve multiple industries beyond internet and technology, and they are put to use in many more ways than before. Of particular relevance is the growing demand for GPU-driven data centers, or what Nvidia management calls AI factories. The entire paradigm of how a data center works is changing, with more emphasis on machine learning and generative AI, ramping up the data center market opportunity from $1 trillion to $2 trillion. This is of particular relevance because data centers now account for 88% of Nvidia's revenue. As with any new technology, new competition will try to copy a good thing and try to do it for a cheaper price. Top tech companies like Amazon and Apple are working to design specialized GPUs at a lower cost to drive at least some part of their operations, even if they still rely on Nvidia for the moment. That means even if the opportunity is growing, Nvidia's share of it might not increase proportionally, and more options for clients could also erode its pricing power. Finally, it's interesting to add Nvidia's valuation to the analysis. It trades at a forward one-year P/E ratio of only 24. That could be an indication that the market thinks the company is slowing down. The drop in share price could be because the market is pricing in the effects of competition and saturation. On the other hand, it could just be that the company is growing fast enough to keep pace with the market's expectations, implying that this growth stock is a bargain. That could mean it's undervalued, and the lag between the market's perception and the reality of what's coming could create a windfall for patient investors over the next three years.

Better Artificial Intelligence (AI) Stock: Nvidia vs. CoreWeave | The Motley Fool

Nvidia has a long history of success stretching back to the creation of its famed graphics processing unit (GPU) in 1999. CoreWeave offers cloud computing infrastructure tailored for AI, and when it went public, Nvidia bought shares. Does the up-and-coming CoreWeave have what it takes to make a good AI investment for the long haul? Or is tried-and-true Nvidia a safer choice in the competitive AI market? Nvidia became an AI juggernaut thanks to its popular GPUs. This hardware enables computers to process data faster and more efficiently than a traditional CPU, and was initially developed for video game graphics. Jensen Huang, Nvidia's prescient founder and CEO, recognized years ago that GPUs could be applied to AI. Now, he believes cloud computing will become akin to factories in the Industrial Revolution to deliver economies of scale for AI. As part of this vision, he explained in a press release, "AI, like electricity and internet, is essential infrastructure for every nation." That's why Nvidia is helping countries, such as Saudi Arabia, construct AI factories. On top of that, the company introduced its powerful Blackwell Ultra platform this year. Blackwell Ultra shifts AI systems toward mimicking human thinking, such as drawing conclusions from data. This marks the AI sector's move into what's referred to as the age of AI reasoning. These developments set Nvidia up for growth over the long run. Its AI success has already translated into a record $39.3 billion in sales in its fiscal fourth quarter, ended Jan. 26, representing 78% year-over-year growth. Moreover, fiscal Q4 net income rose 80% year over year to $22.1 billion. Nvidia forecasts sales will accelerate to $43 billion in Q1, a 65% increase over the prior year's $26 billion. CoreWeave's cloud computing services employ Nvidia's GPUs, and it contracts with companies hungry to utilize that computing power. As a newly public business, CoreWeave has only its first-quarter earnings report under its belt, but those Q1 results were outstanding. Revenue rose 420% year over year to $981.6 million. Its performance was thanks to CoreWeave's success in acquiring customers. Clients include AI luminaries such as Microsoft, IBM, and OpenAI. At the end of Q1, the company's contracts represented an impressive revenue backlog of $25.9 billion. CoreWeave already added to this haul in Q2 thanks to a $4 billion contract expansion with one of its customers. In addition, while President Donald Trump's tariff policies introduced economic uncertainty, CoreWeave isn't seeing an effect. About the tariffs, CFO Nitin Agrawal stated on the recent earnings call: "We haven't observed any impact on customer behavior. In fact, we are seeing an acceleration of customer demand." As a result, the company estimates Q2 sales of about $1.1 billion, up from $395 million in 2024. For the full year, CoreWeave projects 2025 revenue of at least 4.9 billion compared to last year's $1.9 billion. Despite the massive sales growth, CoreWeave is not profitable. The company exited Q1 with a net loss of $314.6 million. This is more than a 100% increase from the prior year's net loss of $129.2 million as the company invested in expanding its AI infrastructure to keep up with customer demand. When it comes to picking an AI stock, plenty of reasons exist to choose Nvidia over CoreWeave. After all, Nvidia has years of business growth behind it, and possesses industry-leading AI tech that even CoreWeave is buying. But one factor to consider is valuation. Here's a look at the forward price-to-sales (P/S) ratio for both companies. This metric measures how much investors are willing to pay for every dollar of revenue based on estimates for the next 12 months. Nvidia's forward P/S ratio dropped this year as the aforementioned economic uncertainty, and the appearance of Chinese AI start-up DeepSeek on Jan. 27, rattled Wall Street's perception of high-flying AI companies such as Nvidia. Even so, CoreWeave's forward P/S multiple is substantially lower than Nvidia's, suggesting CoreWeave stock is a better value. The company's shares have about doubled from its IPO price of $40 at the time of this writing. Its strong trend of sales growth could lead to further stock appreciation. However, Nvidia shares warrant a higher valuation. The tech giant is profitable, a leader in the AI field, and its diluted earnings per share rose 82% year over year to $0.89 in Q4, which shows it's delivering results for shareholders. CoreWeave has little history to demonstrate whether it can do the same. Therefore, only investors with a high risk tolerance should consider buying CoreWeave stock. Nvidia is a strong company under Huang's leadership, and its P/S ratio drop makes now a good time to invest in this AI stock.

Prediction: This Artificial Intelligence (AI) Stock Will Skyrocket After May 28 (Hint: It's Not Nvidia) | The Motley Fool

Artificial intelligence (AI) pioneer Nvidia is set to release its fiscal 2026 first-quarter results after the market closes on May 28, and analysts and investors will be waiting to see how the chip giant fares considering the central role it plays in the AI space. Nvidia's chips power AI data centers from the world's leading cloud computing companies. The company's graphics processing units (GPUs) are also in solid demand from governments looking to shore up their AI infrastructure. So, a closer look at Nvidia's results and outlook will help us understand the direction in which the AI market is headed. However, there's another company that's benefiting from the fast-improving adoption of AI and will release its fiscal 2025 fourth-quarter results on May 28 -- C3.ai (AI 2.24%). The company provides enterprise AI solutions to both government and enterprise customers, but it has endured a difficult 2025 so far. C3.ai stock is down 33% this year. However, its upcoming quarterly report could help turn its fortunes around and send the stock soaring. The generative AI software market was worth an estimated $10 billion in 2023, but it is expected to jump to a whopping $176 billion in 2030, according to ABI Research. The company points out that the integration of generative AI software in enterprise use cases is likely to generate $434 billion in value annually by the end of the decade. That's not surprising as this technology is helping companies boost productivity and improve the efficiency of their operations. C3.ai is benefiting from the growing adoption of generative AI software. The company expects to report $389 million in revenue for the recently concluded fiscal year, which would be a 25% increase over the prior year. It is worth noting that C3.ai's annual top-line growth is projected to accelerate by 9 percentage points in the latest fiscal year. This can be attributed to the improving demand for C3.ai's AI software solutions. The company provides more than 130 turnkey applications that could be deployed across a wide range of industries, while also offering an AI development platform to customers, using which they can build and deploy AI agents and applications. Importantly, customer interest in C3.ai's AI software offerings has been picking up, which explains the improvement in its growth rate in the recent fiscal year. For instance, C3.ai closed 66 agreements in the third quarter of fiscal 2025 (which ended on Jan. 31), an increase of 72% from the year-ago period. These included 50 pilot projects. If C3.ai manages to convert a significant chunk of those pilot projects into actual contracts, it could end up delivering better-than-expected growth when it releases its results later this month. What's worth noting is that C3.ai has exceeded Wall Street's bottom-line estimates by big margins in each of the last four quarters. The company isn't profitable yet, but its losses have been much lower than analysts' expectations of late. C3.ai is projected to end fiscal 2025 with an estimated loss of $0.44 per share. The good part is that its loss is expected to shrink in the future. The potential growth in C3.ai's customer base, along with an increase in spending by the company's existing customers, could allow it to reduce its losses at a faster pace. All this indicates that C3.ai may be able to top expectations when it releases its quarterly results later this month. Moreover, the fast-improving demand for generative AI software and the big jump in the number of agreements that it struck in the last reported quarter could be enough for it to deliver stronger-than-expected guidance. It is worth noting that C3.ai has already jumped 19% in the past month, and more upside cannot be ruled out as a combination of strong results along with impressive guidance could give it a shot in the arm. Additionally, analysts have increased their expectations for the current and the next fiscal year, indicating that they are expecting its momentum to continue. All this makes C3.ai a solid buy going into its quarterly report. It is currently trading at 8 times sales, which is lower than its price-to-sales ratio of 12 at the end of 2024. So, investors can buy this AI stock at a relatively cheaper valuation right now, and doing so could turn out to be a smart move considering that it could zoom higher after May 28.

Should You Buy Nvidia Stock Before May 28? Here's What the Evidence Suggests. | The Motley Fool

The chipmaker's stock has been essentially flat so far in 2025. Could its quarterly results spark a resurgence? Advances in the field of artificial intelligence (AI) have taken the world by storm over the past few years, but much of the initial hype has since subsided. Investors are looking for evidence that the adoption of AI still has legs. Nvidia's (NVDA 0.83%) graphics processing units (GPUs) quickly became the gold standard for training and running generative AI models. The company generated five consecutive quarters of triple-digit revenue and profit growth, but as its growth rate began to decelerate, investors got nervous. The company is scheduled to release the results of its fiscal 2026 first quarter after the market closes on Wednesday, May 28, and shareholders -- and indeed Wall Street at large -- will be sitting on the edge of their seats for clues as to where AI goes from here. Let's review the company's most recent results, see what the available evidence suggests about the company's future prospects, and whether Nvidia stock is a compelling opportunity ahead of its highly anticipated financial report. For its fiscal 2025 fourth quarter (ended Jan. 26), Nvidia reported revenue of $39.3 billion, which soared 78% year over year and 12% sequentially. Strong sales drove robust earnings per share (EPS) of $0.89, which surged 82%. Lest there be any doubt, it was the continuing adoption of AI that fueled the results, as revenue in its data center segment jumped 93%. Nvidia expects its strong growth to continue. For its fiscal 2026 first quarter (ended April 28), management is guiding for revenue of $43 billion, which would represent growth of 65%. Wall Street is equally bullish, with analysts' consensus estimates calling for revenue of $43.15 billion and adjusted EPS of $0.73. While this would mark a minor deceleration compared to last quarter's robust sales performance, it would be remarkably strong nonetheless. Nvidia has a long history of issuing conservative guidance, so the actual results could well be higher. The popular narrative suggests the rapid buildout of AI-centric data centers by the major cloud and tech companies is showing cracks, but the evidence suggests otherwise. Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud, the "Big Three" in cloud computing, have announced plans to boost infrastructure spending this year. Not surprisingly, the vast majority of that spending is earmarked for additional data centers to support demand for AI. Not to be outdone, Meta Platforms has already announced plans for higher capex spending than it originally envisioned. The totals are intriguing: As the world's foremost provider of processors used for AI, Nvidia is well-positioned to capture a significant part of this data center spending from the four horsemen of tech. There's more. The Trump administration recently rescinded the so-called "AI Diffusion Rule." The strict set of export curbs initiated by the Biden Administration was designed to keep U.S. adversaries from using AI against our national interests. Critics complained the rules were too strict and threatened to stifle innovation. Rescinding this rule opened the floodgates, resulting in a host of new AI chip deals for Nvidia. For example, the company announced a partnership with Saudi Arabian company Humain. Nvidia will immediately supply more than 18,000 GB300 Grace Blackwell processors -- its most advanced AI chips -- for the country's data center buildout, with plans to eventually ship "several hundred thousand." The deal also includes Infiniband networking technology solutions, which provide ultra-fast processing combined with low latency. This helps illustrate the vast opportunity that remains for Nvidia. Make no mistake, Nvidia remains extremely volatile, but it's hard to deny the company's long-term success. Over the past three years, the stock has gained 688% (as of this writing) but has also fallen as much as 35% -- so it isn't for the faint of heart. This helps illustrate one of the surest paths to investing success: Buy stocks in the best businesses you can find and plan to hold for at least three to five years. The biggest question on the mind of investors is whether Nvidia stock will rise or fall following its highly anticipated financial report, and the truth is I have no idea. In fact, anyone who professes to know what will happen in the days or weeks to come is not being completely honest. If I were to prognosticate, I would feel comfortable making several very vague predictions: Beyond that, your guess is as good as mine, and my predictions could be dead wrong. That said, nothing about my investing thesis for Nvidia has changed. The company's state-of-the-art GPUs are the gold standard for AI processing, and it continues to dominate the market. There's always the chance someone will create a better mousetrap, so to speak, but the specter of competition is always a factor. The majority of experts believe we're still in the early stages of AI adoption. Most estimates place the AI market size at a minimum of $1 trillion, with some estimates suggesting it could eventually be 10 to 15 times higher. Nvidia stock currently sells for roughly 30 times forward earnings, with its valuation recently rebounding from a two-year low. However, the company's history of innovation, industry-leading position, and long track record of growth give me confidence the best is yet to come. For investors who believe that AI is still in the early innings and Nvidia will continue to lead the charge, buy Nvidia stock and buckle up for the bumpy -- yet potentially lucrative -- ride ahead.

This Is My Top Artificial Intelligence (AI) Stock to Buy Right Now | The Motley Fool

Selecting a single artificial intelligence (AI) stock to buy right now is a difficult task. Every stock has its bear and bull cases, but the key is to find one with a far more certain bull than bear case. If I use those criteria to select my top AI stock to buy right now, I come up with Taiwan Semiconductor Manufacturing (TSM 2.44%) as my top pick. Regardless of what computing hardware a company uses for AI, the road likely leads back to Taiwan Semiconductor. Management is also incredibly bullish on the future, and it has great information that allows it to see a few years into the future. Taiwan Semiconductor is the leading chip foundry in the world, a position it obtained by staying neutral in the chip race while offering cutting-edge technology. Unlike some of the other chip foundry companies, TSMC isn't marketing its own product. This gives clients like Nvidia or Apple the confidence that Taiwan Semi isn't going to steal some of the proprietary chip designs and market them themselves. Taiwan Semiconductor also has leading technology. Its 3 nanometer chip node is the best available globally, although some other fabrication facilities also have this production ability. But it's not stopping there. By the end of 2025, TSMC's 2nm chips will be available, and its 1.6nm chips will be launched in late 2026. The focus on these chips isn't increased power; it's improved energy efficiency. When the 2nm chips are configured to run at the same speed as a 3nm chip, they consume 20% to 30% less power. And 1.6nm chips will improve the energy consumption level by 15% to 20% on top of that. With a large focus on how much energy data centers consume for AI training, these chips should prove popular. Although this is exciting technology, customers aren't waiting for next-generation chips to be launched; they're buying what's available now. This is evident at TSMC's Arizona production facility, which sold out chip production through 2027. This makes it obvious that TSMC management has an idea of what level of demand is brewing a few years out, and the commentary it's provided on this subject is incredibly bullish. Over the next five years, it expects AI-related revenue to increase at a compound annual growth rate (CAGR) of around 45%. Companywide, it expects this growth rate to approach a CAGR of 20%. That's an impressive level of growth for a company of TSMC's size, and it underscores the entire bull case for the company. However, there are some counterarguments to TSMC that investors should know. First and foremost, a large risk is Taiwan's geographical location. Although TSMC announced an additional $100 billion in U.S. chip production facilities and is working on building more production facilities elsewhere in the world, there is still the possibility of a mainland China takeover. The panic and potential ensuing war following such an event would crash the entire market, let alone TSMC. Another threat stemming from TSMC's location is President Donald Trump's tariffs. While there are currently no tariffs on semiconductors, the Trump administration has stated that it's an area it's looking to implement some tariffs after further examination. I'm not sure if there will be a semiconductor tariff based on the various trade deals that are rumored to be ongoing, but TSMC is the sole provider of chips for many of its clients. This means that TSMC can force its clients or their customers to eat the cost of tariffs, although it may provide a bit of relief. Regardless, Taiwan Semiconductor is already building more production facilities in the U.S. to sidestep the tariffs, which is exactly what Trump wants anyway. So, this gesture and plan may be enough to keep TSMC in Trump's good graces and keep semiconductors off the tariff list. The bear case for Taiwan Semiconductor's stock is far weaker than the bull case and relies only on conjecture, rather than hard evidence like the bull case does. With Taiwan Semiconductor's unique positioning as a key provider for nearly every big tech company, I'm bullish on the stock. It's a nearly sure-fire investment over the next five years, which is why it's my top AI stock to buy right now.

Prediction: This Artificial Intelligence (AI) Stock Will Be the Biggest Winner of 2025 | The Motley Fool

It seems like everyone is trying to identify the next big AI stock. There are many to choose from, but as with any craze, picking long-term winners from long-term losers can be a difficult task. While there are many exciting names to choose from, there's one business in particular that every artificial intelligence investor needs to own in 2025 and beyond. Artificial intelligence will be one of the biggest growth opportunities this century. The United Nations believes that the AI market will zoom from $189 billion in value in 2023 to nearly $5 billion in value by 2033. But betting on AI isn't as easy as just buying any business exposed to this massive theme. Some companies are developing AI technologies, some are consuming these technologies to gain competitive advantages and operational efficiencies, and yet others are selling to the AI developers themselves, making future innovation possible. There's an old saying: When everybody is digging for gold, it's good to be in the pick-and-shovel business. This wisdom advises investors not to go straight into the rush itself, but to supply the rush with the requisite supplies. This way, no matter who finds gold, or whether or not there is gold at all, you still come away with a profit. In this regard, no AI stock shines more than Nvidia (NVDA 0.37%). Nvidia is by far the leading supplier of GPUs to the AI industry. Sometimes, these specialized GPUs are sold directly to AI developers. Most sales, however, are directed toward data center providers or cloud computing providers. These businesses own data centers around the world powered by GPUs. When an AI developer wants to train a model, a mature AI business wants to execute an AI application, or a consumer wants to use that application on their smartphone, the data required is usually processed and delivered using cloud computing infrastructure. Roughly 90% of data center GPUs are manufactured by Nvidia -- a dominant market share that shows how much more powerful and in-demand its chips are compared to the competition. Therefore, nearly any business or individual that wants to incorporate AI into their processes will be using Nvidia chips. And any developers looking to build new AI applications will also likely be using Nvidia chips. Put simply, Nvidia is sitting at the center of the AI revolution. However, over the past five years, Nvidia's stock has risen by an astounding 1,400%. Is it too late to jump in? You might be surprised by the answer. Nvidia stock looks expensive at first glance, with shares trading at roughly 46 times earnings. But this is already a very profitable business, and sales continue to grow at double-digit rates. Looking ahead based on next year's earnings, the stock trades at just 30 times forward profits. That's still a premium to the S&P 500's forward earnings multiple of around 23, but the valuation starts to seem much more reasonable once you factor in some expected growth. The most important thing to keep in mind is that the AI revolution won't unfold over the next year or two. This is truly a multidecade opportunity. Nvidia will face competitive and pricing pressures over time, but market growth will be sustained for so long that even if some market share is ceded, the company should still be able to grow significantly over the next decade. As with any growth stock, Nvidia shares will be exposed to high levels of volatility. But if you're willing to stay patient, the upfront premium isn't as steep as it seems, and this one AI stock should be a continued winner through 2025 and beyond thanks to its central position in the AI supply chain.