Hedge fund manager Dan Niles was cautious about investing in Arm Holdings despite its strong debut on the Nasdaq. Niles doesn’t think Arm’s current market capitalization of 170 times earnings is justified, despite projected sales growth of just 20% in 2024. . Instead, Niles recommends a better investment in the AI space, especially Nvidia stock, which has recently fallen more than 10%.
Nvidia is a chip design company with a current market capitalization of 31x, down from its historical ratio of 50x. This is creating a buying opportunity for investors who missed out on Nvidia’s previous growth. Additionally, Nvidia has further solidified its position in the artificial intelligence space with its recent investment in Databricks.
One reason Niles is optimistic about Nvidia is the company’s outstanding revenue growth. The company expects sales to increase 170% in the current financial quarter, outpacing Arm Holdings’ expected growth. Niles emphasizes that Nvidia’s growth rate makes it an attractive option for its current market capitalization, making it appealing to those interested in investing in AI.
Interestingly, while Nvidia had previously considered becoming a major investor in Arm Holdings stock, Niles said other companies such as Nvidia, Intel, Amazon, Meta Platforms, and Alphabet Inc. We believe we offer better investment opportunities based on growth.
In summary, while Arm Holdings made a splash in its Nasdaq debut, Niles believes Nvidia stock is a more attractive option for those looking to invest in the AI space. With strong revenue growth and a relatively low market capitalization, Nvidia has the potential to deliver strong returns to investors.