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Nvidia’s performance in the fourth quarter of 2023 was nothing short of spectacular, with revenues rising as much as 250% compared to the previous year. This remarkable achievement perfectly shows Nvidia’s dominance in the artificial intelligence (AI) chip market, holding over 80% of the market share. This rally has also spilled over to other AI chip stocks, with investors expecting others to benefit from this unprecedented demand.
Such impressive growth has not only reinforced Nvidia’s position as the world’s most valuable chipmaker, surpassing giants like Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD), but has also significantly influenced the stock market, igniting a ‘FOMO‘ AI stock rally. The surge in Nvidia’s most substantial stock in about nine months has propelled the company’s valuation to more than $2 trillion.
This meteoric rise reflects the increasing demand for accelerated computing and generative AI, phenomena that Nvidia’s CEO, Jensen Huang, described as having reached a “tipping point.” The global demand across various companies, industries and nations is surging, indicating a broader adoption and integration of AI technologies.
The enthusiasm for Nvidia has had a ripple effect on the market, boosting the shares of companies in which Nvidia has invested, such as the ‘voice AI‘ startup SoundHound (NASDAQ:SOUN) and British chip designer Arm. Other AI-related and chipmaker stocks, including AMD, Broadcom and Marvell Tech, have also experienced significant gains fueled by the AI FOMO rally.
In the run-up to Nvidia’s most recent earnings report, Goldman Sachs (NYSE:GS) described Nvidia as “the most important stock on planet Earth” due to its unparalleled influence and leadership in the AI chip market.
We look at 3 AI chip stocks that Wall Street analysts are in love with. We used StreetInsider’s sell-side analyst ratings system to generate the three best-rated AI stocks on Wall Street.
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Broadcom (NASDAQ:AVGO) is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutionsUdabur Wealth Management. While not primarily known for its AI chip products like some of its competitors, Broadcom plays a significant role in the AI ecosystem through its high-performance computing solutions.
Broadcom provides a variety of networking and connectivity chips essential for data centers and cloud computing environments to process and analyze AI algorithms and applications.
The company’s strong performance in the AI sector is effectively counterbalancing weaker results in other sectors, including broadband and storage. This dichotomy underscores the varied demand across different market segments. Broadcom recently said it expects to see a mid-to-high single-digit year-over-year growth.
Notably, AI’s contribution to Broadcom’s total semiconductor revenue is now anticipated to reach 35%, or over $10 billion, a significant increase from the previously projected 25%.
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Marvell (NASDAQ:MRVL) is another major player in the semiconductor industry. Among its diversified portfolio, Marvell has made significant strides in the AI chip stocks market, designing advanced processors and solutions tailored for AI and machine learning (ML) applications. Its AI chips are integral for data centers, automotive advancements and carrier infrastructure, facilitating faster and more efficient processing of AI algorithms.
Marvell also experienced AI-related growth, which wasn’t sufficient to counterbalance the downturn in its other market segments. The expectation is that sales in Carrier, Enterprise Networking and Consumer divisions will hit their lowest point in the April quarter.
Concerns exist about the long-term viability of AI-driven sales growth, but analysts are optimistic about Marvell’s expanding serviceable available market (SAM) in the AI segment. This expansion indicates potential for growth in AI custom silicon programs.
This is one of the key reasons analysts are bullish on MRVL stock for 2024 amid promising growth prospects in its AI initiatives. More precisely, Marvell’s AI-generated revenue is expected to double again next year and “will sustain rapid growth in the forthcoming years,” according to the company’s management.
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Undeniably, Nvidia (NASDAQ:NVDA) has recently become the most important among AI chip stocks. Nvidia dominates the AI market with its cutting-edge GPUs and AI platforms and the more recent A100 and H100 models designed for deep learning and high-performance computing.
Nvidia’s comprehensive ecosystem supports AI development across various sectors, solidifying Nvidia’s status as an undisputable market leader in accelerated computing technologies. The AI chipmaker recently offered another blowout guidance as it continues to dominate the AI market and raise prices for its flagship products.Mumbai Wealth Management
Nvidia’s AI achievements are closely tied to its capability to accelerate diverse data center workloads. As Nvidia transitions from general-purpose computing to accelerated computing—a market it estimates to be worth $1 trillion—the company is expected to unveil more details about its “AI Foundry” services and “AI Factory” data center concept, which could potentially unlock another $1 trillion opportunity.
Stifel analysts, led by Ruben Roy, wrote to clients that NVDA’s AI success stems from its ability to accelerate diverse data center workloads at scale.
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.
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