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Bernstein says two chip stocks are the ideal way to benefit from the rising demand for artificial-intelligence semiconductors: Nvidia and Broadcom.
On Tuesday, semiconductor analyst Stacy Rasgon reiterated his Outperform ratings for both chip companies.
“If you really want to invest in generative AI, NVDA remains your best option,” he wrote. And “[Broadcom] is a real AI story here as the company benefits both from networking and their custom ASIC [application-specific integrated circuits, or specially made custom chips] business.”
In Tuesday trading,
Nvidia
stock (ticker: NVDA) is up 0.6% to $429.44 and
Broadcom
stock (AVGO) is up 0.3% to $870.72. Rasgon reaffirmed his price targets of $475 and $875 for Nvidia and Broadcom, respectively.
Nvidia chips have high exposure to generative AI, which has been trending since OpenAI’s release of ChatGPT late last year. Generative AI ingests text, images, and videos in a brute-force manner to create content.
The analyst said he believes there is upside to Nvidia’s financial guidance for the rest of the year. “In the long term [for Nvidia] we believe the overall opportunity remains enormous, and [it is] still early.”
For Broadcom, Rasgon cited how the company is outperforming the rest of the industry on the strength of its custom chip business, which he believes will account for 25% of its semiconductor revenue next year from 15% this year.
“Broadcom benefits from better semi revenue visibility…and attractive valuation,” he wrote.
Nvidia stock has rocketed about 172% over the past 12 months, while Broadcom stock has surged by 74% in the same time period. That compares with a 42% rise for the
iShares Semiconductor
exchange-traded fund (SOXX), which tracks the ICE Semiconductor Index.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/nvidia-broadcom-chip-stocks-ai-5ac3d23f?siteid=yhoof2&yptr=yahoo