We recently published a list of 11 Best Innovative Stocks to Buy According to Analysts. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against other best innovative stocks to buy according to analysts.

Innovative stocks are the companies that continuously invest in developing new products, services or even entire business models, enabling them to stay ahead of competition and thrive in any stage of the market cycle. The ability to innovate can be considered a form of adaptability, which is required to survive in a tough and hyper-competitive business environment. It also helps businesses build a robust competitive advantage, often called “business moat”, which is a determinant of profitability and ability to gain market share and thus grow above the industry growth pace.

Empirical research links superior profitability (as measured by Return on Equity or Return on Invested Capital) and the ability to gain market share with superior stock price returns. Analysts and researchers find that such companies are often the ones that focus on innovation and constantly reinvent themselves to prevent the competition from catching up. Notable examples of successful innovation in the past are the creation of user-friendly computers, which cemented some of the widest moats that thrive until this day, or completely new production and fulfillment models such as the “just-in-time”. The importance of investing in innovative stocks has been recognized by many legendary investors, such as Peter Lynch. Here’s what he said on this topic:

“The best companies to invest in are those that innovate and are growing within industries you understand.”

READ ALSO: 10 Best Innovative Stocks that Pay Dividends

The best innovative stocks are even more favored now than in the past, as technological advancements are disrupting industries faster than ever. For instance, the proliferation of the AI trend is a game changer in many industries, as this new technology not only allows businesses to slash operating costs and optimize processes but can also create complementary products, services, and even entirely new market opportunities. The companies that are the first to capitalize on AI capabilities will be the ones to gain market share, become more profitable than ever, and thrive for years to come. Likewise, the pandemic, high inflation, high interest rates, and geopolitical tensions have uncovered other areas that require innovation – sustainable supply chains are now more important than ever, while automation, AI, or robotics initiatives are required to preserve profitability amid inflationary pressures.

Investors often inquire how (if at all) innovative stocks can help them build better portfolios, with higher expected returns and better resilience to uncertainty and turmoil, similar to the one experienced by the US economy at the moment. The answer is simple – innovative stocks can be found in a wide range of industries, which means that one could build a completely balanced portfolio by incorporating strictly innovative stocks. Such an approach will likely increase the overall quality of the portfolio and metrics like Return on Equity and revenue growth rate, which are strong determinants of stock price returns.

We believe that innovative stocks are a reliable way to hedge against the worst-case scenario for the US economy—where sharp cuts in public spending as well as the tariff wars will cause a significant economic slowdown and fuel inflation, leading to potential stagflation and a prolonged bear market. Leading researchers, such as Yardeni Research and Goldman Sachs, have already significantly increased their odds that the US will enter a recession in 2025, as well as significantly lowered their target for the US stock market index until the end of 2025. Buying the best innovative stocks now could be the best way to find pockets of outperformance in the US stock market, as these stocks are most likely to find ways to offset inflation, cut costs, create new revenue opportunities, and thrive in any environment.

A close-up of a colorful high-end graphics card being plugged in to a gaming computer.

Our Methodology

We screened the market and selected companies that actively prioritize and promote the development of new and groundbreaking ideas, products, services, or business processes. From that list, we picked 11 stocks with the highest average analysts’ upside as of March 30, 2025, and ranked them in ascending order. For each stock, we also include the number of hedge funds that own the stock as of Q4 2024, according to our proprietary database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

NVIDIA Corporation (NASDAQ:NVDA)

Average analysts’ upside: 55.93%

Number of Hedge Fund Holders: 223

NVIDIA Corporation (NASDAQ:NVDA) is a global leader in graphics processing units (GPUs) and AI software. The company designs and manufactures GPUs for gaming, data centers, professional visualization, and automotive markets, as well as system-on-a-chip (SoCs) for mobile devices. Its leading products are GeForce GPUs in gaming and A100 GPUs used in AI applications, machine learning, and high-performance computing. The company also develops software platforms such as CUDA and NVIDIA Deep Learning AI to enable innovation in various industries. The US-based company ranked 2^nd on our recent list of 10 Hot AI Stocks to Buy Now.

NVIDIA Corporation (NASDAQ:NVDA) delivered another record quarter with Q4 revenue of $39.3 billion, up 12% sequentially and 78% on a YoY basis, significantly exceeding their outlook of $37.5 billion. For fiscal 2025, the company achieved total revenue of $130.5 billion, representing a remarkable 114% increase from the prior year. Data Center revenue was particularly strong at $115.2 billion for fiscal 2025, more than doubling from the previous year. The fourth quarter saw record Data Center revenue of $35.6 billion, up 16% sequentially and 93% YoY, driven by the successful Blackwell ramp and continued Hopper 200 growth.

The Blackwell architecture has demonstrated unprecedented success, with $11 billion in revenue during Q4, marking the fastest product ramp in the company’s history. NVIDIA Corporation (NASDAQ:NVDA) is experiencing extraordinary demand for Blackwell, particularly as AI evolves beyond perception and generative AI into reasoning. Management expects strong growth in 2025, with data centers increasingly dedicating most of their Capex to accelerated computing and AI. The company’s outlook for Q1 is robust, with expected revenue of $43 billion, plus or minus 2%, driven by significant Blackwell ramp-up and sequential growth in both the Data Center and Gaming segments.

Overall, NVDA ranks 1st on our list of best innovative stocks to buy according to analysts. While we acknowledge the potential of NVDA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.