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Marvell Technology stock has risen 65% so far this year.
Courtesy of Marvell
J.P. Morgan says two chip stocks will do well riding the rising demand for custom-designed semiconductors:
Broadcom
and
Marvell Technology
.
On Thursday, analyst Harlan Sur told investors the $14 billion high-end ASIC [application specific integrated circuits or specially made custom chips] market will grow by 20% a year into the future.
“Custom chip design activity has accelerated over the past few years and a good example is the aggressive adoption of generative AI which is driving accelerating demand for custom chip (ASIC) AI compute accelerators,” he wrote. “We believe that
Broadcom
and
Marvell
will be the biggest beneficiaries of this resurgence in custom chip design.”
In Thursday trading, Broadcom (ticker: AVGO) stock is down 1.7% to $794.54 and Marvell Technology (MRVL) shares rose 3.7% to $60.65.
Generative AI has been a popular investment theme this year. The technology ingests text, images, and videos in a brute-force manner to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
Sur estimates that Broadcom has more than 80 ASIC chip design contracts, while Marvell has over 40 design wins in its pipeline. He says Broadcom is the leading player, accounting for 35% of the market, and that Marvell is number 2 with 15% of the market.
Sur has an Overweight rating on Marvell stock with a $70 price target. He currently doesn’t have a rating on Broadcom; he dropped coverage after it was announced J.P. Morgan is acting as a financial advisor to
VMware
(VMW) in connection with its sale to Broadcom.
Broadcom is scheduled to report its fiscal-second-quarter results after the market close Thursday.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/broadcom-marvell-technology-chip-stock-ai-66c05d9b?siteid=yhoof2&yptr=yahoo