Polen Focus Growth Strategy Reveals Top Pick in Volatile Third Quarter: NVIDIA Corporation (NVDA) Holds Strong

A US-based investment management company, Polen Capital, has released its third quarter 2024 investor letter, outlining its growth strategy amidst market volatility. According to the report, the fund returned 3.21% (gross) and 2.99% (net) in the third quarter, outperforming the Russell 1000 Growth Index and S&P 500 Index.

In its top five holdings, Polen Focus Growth Strategy highlighted NVIDIA Corporation (NASDAQ:NVDA), a leading provider of graphics, compute, and networking solutions. The company boasts impressive performance, with a one-month return of 10.38% and shares gaining 192.53% over the last 52 weeks.

In the Q3 2024 investor letter, Polen Capital stated that NVIDIA Corporation was the top relative contributor this quarter despite modest underperformance, representing just 1.7% decline in value. The company's stock experienced a dramatic 27%-31% fluctuation throughout the third quarter, mirroring broader market volatility.

NVIDIA Corporation (NASDAQ:NVDA) is attributed to its exposure to increasing demand for generative AI infrastructure spending and capital expenditures from cloud service providers and large enterprises. However, shares endured weakness related to delayed next-generation Blackwell chip release and an earnings forecast that exceeded expectations but not as much as investors had hoped.

Polen Focus Growth Strategy remains optimistic about NVIDIA Corporation (NASDAQ:NVDA) as a highly advantaged business with significant demand for its chips and servers ahead of businesses' needs. Nevertheless, the fund's conviction lies in AI stocks delivering higher returns within a shorter timeframe.

Notably, NVIDIA Corporation (NASDAQ:NVDA) is currently ranked 5th on our list of 31 Most Popular Stocks Among Hedge Funds, with 179 hedge fund portfolios holding shares at the end of Q2, up from 186 in the previous quarter. The company reported another record quarter in Q2, with $30 billion in revenues representing a 122% year-over-year increase and 15% sequential growth.

While acknowledging NVIDIA Corporation (NASDAQ:NVDA)'s potential as an investment, Polen Capital highlights its reliance on AI stocks for better returns within a shorter timeframe. For investors seeking an AI stock with similar promise but trading at less than 5 times earnings, the company recommends exploring its report on the cheapest AI stock.