By Tae Kim
Surging demand for AI chips will last for several years and benefit three semiconductor companies, according to Jefferies.
Nvidia, Marvell, and Broadcom are well positioned to benefit from the trend, said analyst Blayne Curtis on Thursday. He has Buy ratings on all three companies.
"Nvidia continues to see unprecedented demand that far exceeds even their rapidly expanding capacity. Hyperscalers are accelerating spend on GPUs but also their internal ASIC programs," he wrote. "We still see Nvidia retaining dominant share but believe there is room for ASICs [application specific integrated circuits] to ramp as well."
Curtis forecasts the AI accelerator market will grow by 58% a year from $47 billion in 2023 to $287 billion in 2027. He sees no signs of a capex spending slowdown from the major technology companies -- including Microsoft, Alphabet, and Meta.
"We see the most near-term upside at Marvell and Nvidia, but do expect outperformance from Broadcom later in 2025," he wrote.
Currently, Broadcom's AI chip business is primarily from Google, but other companies should start using Broadcom in a significant way in the coming years, Curtis said.
In Monday afternoon trading, Nvidia fell 1.9% to $144.88 and Marvell dropped 2.4% to $91.58. Broadcom declined 2.7% to $178.74.
Write to Tae Kim at tae.kim@barrons.com
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(END) Dow Jones Newswires
November 11, 2024 14:15 ET (19:15 GMT)
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