As Nvidia’s share price continues to rise rapidly amidst the artificial intelligence hype, investors are questioning the sustainability of its valuation. While the stock currently trades at a high 2.5% free cash flow yield for next year, some are urging caution as historically Nvidia traded at a 4% FCF yield before the pandemic.
Hannah Gooch-Peters, a global equity investment analyst at Sanlam Investments, believes there are other stocks with similar operating profit margins to Nvidia’s 60% that may offer more sustainable investment opportunities.
On the other hand, many tech companies are investing in infrastructure for artificial intelligence, which is a power-intensive industry. As the demand for AI continues to grow, so too will its power needs. Morgan Stanley Investment Management’s Aaron Dunn has identified one stock that could benefit from this trend, offering investors an opportunity to capitalize on the increasing power requirements of AI technology.
According to Aaron Dunn, this particular stock has shown strong growth potential and could provide investors with long-term returns. Additionally, he believes that this company is well positioned to take advantage of the growing demand for AI technology and its associated infrastructure.
