Every month, we ask our freelance writers to share their top US stocks with investors — here’s what they would like to buy for December!
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Nvidia
What it does: Nvidia designs and sells graphics processing units (GPUs) that are used in gaming, robotics and to advance artificial intelligence (AI) applications.
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By Harshil Patel. Nvidia (NASDAQ:NVDA) shares have soared by an astonishing 62% a year over the past decade.
But what comes next for this 1.1 trillion-dollar company? Well, several reports show predictions of rapid growth for the AI market over the coming decade.
The world has $1 trillion worth of data centres installed in the cloud, and that’s in the process of shifting into accelerated computing and generative AI.
As such, Nvidia’s chips could be in demand for years to come. Sales have soared 206% year-on-year, which is frankly mindboggling for a company of this size.
Bear in mind that Nvidia isn’t immune to risks though. The US Government recently banned exports of the most advanced AI chips to China. And this region has typically been 25% of data centre revenues.
Nvidia expects sales to this region to fall in Q4, but they believe it will be more than offset by growth in other regions.
Harshil Patel owns shares in Nvidia.
Shopify
What it does: Shopify is a cloud-based e-commerce platform that enables merchants to create online storefronts.
By Zaven Boyrazian. Shopify (NYSE:SHOP) shares have been on quite the rollercoaster ride over the last two years, dropping by around 50%! Yet despite all this downward volatility, the underlying business is still thriving.
Third-quarter revenues, underlying earnings, and gross margins all came in ahead of expectations. There was a lot of concern about Amazon’s rollout of ‘Buy with Prime’ stealing Shopify’s market share. After all, it was the first time merchants could tap into Amazon’s logistics solutions outside of Amazon’s marketplace. However, the opposite appears to have happened.
After adding support for ‘Buy with Prime’ onto its own platform, Shopify has seen an influx of new merchants signing up. Subscription revenue subsequently grew by 29% to $486m, pushing monthly recurring revenue up 32% to $141m. And since more merchants means more transactions flowing through Shopify’s payment network, impressive double-digit growth looks like it’s set to continue as we move into 2024 and beyond.
Zaven Boyrazian owns shares in Shopify.
Tesla
What it does:Tesla is the world-famous electric car, renewable energy and software company run by Elon Musk.
By Oliver Rodzianko. I consider the AI upside of Tesla (NASDAQ:TSLA) underpriced in the shares.
If it successfully implements autonomous taxi operations, the effect will be high software-like margins.
The biggest downside I see to investing in the company is the volatility the shares commonly see. While the current share price does present opportunity, I am prepared for a bumpy road to Tesla’s significant AI revenue.
On a purely financial front, the company shows relative weaknesses, including a high price-to-earnings ratio of around 75. However, high profits in investing often come from anticipating events outside of what the financials currently reveal.
I believe the public is in for a shock when they see how the company evolves. Similarly, the significant revenue and margin expansion that will come with its dominance in AI driving warrants a high valuation.
As the current price is down around 40%, I’m buying more Tesla shares this December.
Oliver Rodzianko owns shares in Tesla.
