Baron Fifth Avenue Growth Fund on NVIDIA Corporation
Thesis
The Fund believes investors are underestimating the durability of NVIDIA's growth as AI infrastructure spending expands. Despite repeated concerns about custom ASICs and competing accelerators, NVIDIA's data-center business has grown dramatically because its installed base, developer ecosystem, model optimization, reliability, utilization, and total cost of ownership remain difficult to displace. Blackwell is the fastest-ramping chip in NVIDIA's history, networking revenue has tripled year over year, and the company has approximately $500 billion of orders booked in roughly four and a half months. The Fund argues that NVIDIA's valuation effectively assumes growth collapses toward a GDP-like terminal rate far sooner than its fundamental outlook suggests.
“NVIDIA's ecosystem has proven difficult to displace.”
Key risks
- Alternative accelerators including Google TPUs, Amazon Trainium, Meta ASICs, and other custom chips could gain market share.
- The thesis would weaken if AI demand proves less durable than the broader infrastructure buildout currently implies.