Shares of semiconductor giant Nvidia (NVDA) have been a wealth generator for investors, with an astonishing 14,100% return over the past decade. However, with the AI industry continuing to soar, here are three alternative top-rated AI chip stocks that investors might want to consider.
Broadcom: Diversified and Expansive
Valued at a market cap of $518 billion, Broadcom (AVGO) has made significant strides in expanding its product portfolio. Through strategic acquisitions, such as Avago Technologies and more recently CA Technologies and Symantec’s enterprise security business, it has successfully diversified its revenue base, making it less cyclical than other companies. Broadcom has achieved an impressive 15% annual sales growth and seen a remarkable increase in its gross margins, ultimately boosting its adjusted earnings by 21%. Analysts have shown strong confidence in the company, with the majority recommending a “strong buy”. However, the stock is currently priced at an average target that implies just under 1% of expected upside from current levels, with a 13.9% premium on the Street-high target.
Marvell Technology: Navigating Market Challenges
Marvell Technology (MRVL) has weathered a slight decline in the recent fiscal quarter due to weakening segments, such as on-premise data centers and enterprise networking. Yet, despite these challenges, the company managed to surpass analysts’ expectations. Looking ahead, Marvell is poised for a turnaround in fiscal 2025, with forecasts indicating a substantial sales surge and earnings growth. Analysts have expressed confidence in Marvell, with the majority recommending a “strong buy” for the stock, predicting a potential 7.5% increase from the current prices.
Monolithic Power: Embracing AI Demand
Monolithic Power (MPWR) has made strides in designing and manufacturing integrated power semiconductor solutions for various market applications, positioning itself to capitalize on the increasing demand for AI technologies. With its relatively expensive stock price, analysts remain bullish on MPWR due to anticipated higher cash flows driven by AI demand. The majority of analysts back this confidence, with the average target price for MPWR stock suggesting a 5.9% upside from current prices.
In conclusion, while Nvidia has undoubtedly been a juggernaut in the semiconductor industry, these alternative AI chip stocks present compelling opportunities for investors to diversify and capitalize on the burgeoning AI space.