NVIDIA & 2 Profit-Rich Stocks to Watch as Nasdaq Hits Milestone

The Nasdaq recently achieved new all-time highs, closing at 22,788.98, prompting a focus on highly profitable companies within the index. A screening methodology prioritizing strong net income ratios, above-industry growth, and positive analyst ratings identified 74 such stocks, with NVIDIA (52.4% net profit margin), Broadcom (31.6%), and ACM Research (13.8%) specifically noted for their robust bottom-line performance amid the market's milestone.

Analysis

Against the backdrop of the Nasdaq Composite reaching a new all-time high of 22,788.98, this analysis shifts focus to identifying fundamentally strong companies through a quantitative screening process. The methodology prioritizes firms with superior profitability, defined by a trailing 12-month net income ratio and growth rates for both sales and net income that exceed industry averages. This screen narrowed a universe of over 7,600 stocks to 74, highlighting a strategic pivot towards quality within a bull market. Three semiconductor-related companies are spotlighted: NVIDIA (NVDA), Broadcom (AVGO), and ACM Research (ACMR). NVIDIA stands out with an exceptional 52.4% net profit margin, with the article citing a potential $100 billion investment in OpenAI as a factor in its market strength. Broadcom also demonstrates robust profitability with a 31.6% net margin, while capital equipment firm ACM Research shows a healthy 13.8% margin. Notably, despite these strong fundamental metrics and the overall bullish market sentiment, all three highlighted companies carry a Zacks Rank #3 (Hold), suggesting that while their operational performance is stellar, their current market valuations may already reflect this success, warranting a neutral near-term outlook from the rating service.

Key Decisions for Investors

• Given the Nasdaq's record levels, investors should consider re-evaluating portfolios to favor companies with proven, high net income margins as a potential buffer against valuation-driven volatility.
• For those holding or considering NVIDIA and Broadcom, their exceptional net margins of 52.4% and 31.6% respectively are key pillars of the investment thesis, but the 'Hold' ratings suggest disciplined monitoring of valuation and entry points is crucial.
• Investors seeking to diversify within the semiconductor sector could analyze ancillary players like ACM Research, whose 13.8% net margin indicates strong fundamentals in the capital equipment segment of the value chain.
• It is critical to independently verify the article's claim of a $100 billion investment by NVIDIA in OpenAI, as this uncorroborated statement would have significant implications but may be inaccurate.