Investors who are concerned they’re overexposed to Nvidia could replace the name with these steady growth stocks instead, according to Trivariate Research’s Adam Parker. Nvidia’s earnings results next month will likely be “the most important pending data point” this earnings season, as strong guidance from the chipmaker could mean the artificial intelligence trade still has legs, Parker wrote on Sunday. “If NVDA reports that demand is still robust as far as the eye can see, owning AI-exposed semiconductors remains prudent,” Parker said. NVDA 1Y mountain Nvidia shares over the past year But for investors worried Nvidia could be due for a pullback, it may be time to find alternatives to the stock, Parker continued. Nvidia shares have made an eyewatering advance this year, up by more than 80%, but it has dipped slightly this month amid concerns that a weakening macro could finally put a dent in the stock. “A change in financial conditions will create more volatility,” Parker wrote. “For those investors who are performing well – and worried about losing the alpha they have generated YTD in a pending rotation, it is prudent to look for growth stocks with positive alpha that have a low correlation to NVDA.” The strategist screened for large cap growth stocks with either a negative or low correlation to Nvidia, as well as a positive beta-adjusted return since the beginning of 2023. A positive beta-adjusted return refers to a stock’s ability to beat the market after adjusting for volatility. “For those looking to hedge their aggressive AI-semiconductor bets, this group appears prudent,” Parker wrote. Here are some of the stocks. Berkshire Hathaway surfaced as a large cap growth stock with low correlation to Nvidia , that’s also able to beat the market. Shares are higher by more than 12% this year. Eli Lilly came up on the screen. The pharmaceutical stock surged more than 30% this year, but some on Wall Street anticipate further expansion ahead. This month, Citi hiked its price target to $895 from $675, saying Eli Lilly can continue “riding the GLP-1 rocket.” Shares closed Friday at $751.64. Charles Schwab was another large cap growth stock with low correlation to Nvidia. Shares of the financial services company on Monday reached a fresh intraday high, suggesting the trend is to the upside for the stock. Shares are up by more than 5% this year. Waste Management and Emerson Electric also surfaced on the screen.
