The AI Computing Stock That Big Money Managers Are Quietly Buying
Summarize this article with:
As competition heats up in AI chips, these billionaires continue to bet on the leader.Despite its massive run, rising 1,100% since 2022, some of the best professional investment managers continue to buy Nvidia (NVDA +1.60%) stock.
Third Point Capital's Daniel Loeb and Appaloosa Management's David Tepper are two notable billionaires who have added to their firm's holdings in the past two quarters. The stakes in the artificial intelligence (AI) chip market have never been higher, as alternative chip options emerge to challenge Nvidia's dominant position. Here's what might explain why these prominent money managers are still building positions after Nvidia's monster run. Image source: Getty Images. Software widens Nvidia's competitive moat AI continues to provide a significant tailwind for the chip industry. Hyperscalers are investing in expanding data center capacity, and new AI models are requiring more compute power. This creates a favorable backdrop of growing demand for Nvidia's powerful graphics processing units (GPUs). Its data center revenue grew 66% year over year in the most recent quarter. ExpandNASDAQ: NVDANvidiaToday's Change(1.60%) $2.95Current Price$187.79Key Data PointsMarket Cap$4.6TDay's Range$186.83 - $189.6052wk Range$86.62 - $212.19Volume4.7MAvg Vol187MGross Margin70.05%Dividend Yield0.02% While some chipmakers, including Broadcom, are winning business by designing custom AI chips, Nvidia is protecting its lead by providing free tools like CUDA, which let developers easily build on Nvidia's hardware. Once AI researchers adopt CUDA, switching to another chip can disrupt product development. Nvidia had 5.9 million developers using CUDA in 2024, up from 4.7 million in 2023. Considering this critical advantage, I think Loeb and Tepper see value in Nvidia stock right now. The stock trades at a forward price-to-earnings ratio of under 25 as I write this, which is attractive relative to the momentum in its data center business.Read NextJan 25, 2026 •By Justin PopePrediction: These 2 Stocks Will Be the Biggest Winners From $500 Billion AI Spending in 2026Jan 25, 2026 •By Trevor JennewineOpenAI Stock vs. Anthropic Stock: Which Nvidia-Backed AI Start-up Would Be the Best IPO Stock to Buy in 2026?Jan 24, 2026 •By Adam SpataccoThe 5 Most Popular Stocks on Robinhood to Begin 2026Jan 24, 2026 •By Keithen DruryMy Top 3 Chip Stocks for 2025 Crushed the Market. Here's Why They Can Repeat Again in 2026.Jan 24, 2026 •By Manali Pradhan, CFA2 Quantum Computing Stocks to Buy in Early 2026Jan 24, 2026 •By Stefon WaltersIf You'd Invested $1,000 in Nvidia 5 Years Ago, Here's How Much You'd Have TodayAbout the AuthorJohn Ballard has been a contributing writer at The Motley Fool since 2016, covering consumer goods and technology stocks. He holds a bachelor’s degree in business administration with a focus in real estate finance from the University of Arkansas at Little Rock.TMFRazorbackStocks MentionedNvidiaNASDAQ: NVDA$187.79 (+0.02%) $+2.95BroadcomNASDAQ: AVGO$320.25 (0.02%) $5.24*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.