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The semiconductor industry is poised to enter its earnings season with a keen emphasis on artificial intelligence (AI), especially focusing on Nvidia (NASDAQ:)’s graphics-processing units (GPUs) that are instrumental to the AI sector. The industry, maintaining a balanced supply and demand, anticipates sales excluding memory chips to turn positive this year for the first time.
Nvidia, renowned for its solid hardware and software platform, is the premier AI chip maker. The company has been rated as Outperform by Oppenheimer’s Rick Schafer, who also advises investors to consider Monolithic Power (NASDAQ:) Systems, Marvell (NASDAQ:) Technology, and Broadcom (NASDAQ:).
AI chips are projected to dominate this earnings season due to a significant 30% increase in spending on AI-accelerated server systems. In contrast, spending on unaccelerated servers has seen a 20% decline. Investors are urged to favor chip stocks with AI exposure.
Monolithic Power Systems, a supplier of power-management devices used in Nvidia’s GPUs and Advanced Micro Devices (NASDAQ:), is regarded as a valuable investment owing to its role in components of Nvidia’s rivals. Schafer has set a $650 price target for Nvidia and a $565 target for Monolithic Power Systems.
Schafer accentuates the significance of AI networking chips as foundational elements for generative AI. Accordingly, he rates Marvell Technology and Broadcom as Outperform with price targets of $70 and $990 respectively.
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