Despite a downturn earlier this summer, the tech industry – especially its semiconductor chip segment – has been bouncing back. And importantly for investors, the semiconductor stocks are quickly moving back to their leading position.
The reasons are clear. Chip technology is the foundation stone for artificial intelligence, and AI is driving the increasing digitalization of our global economy. The growth of AI is fueling increased demand for high-performance computers, data center servers, and the high-capacity chips that make them possible.
The key here lies in the graphics processing units that are rapidly becoming ubiquitous at tech’s cutting edge. Originally designed to power quality graphics for high-end gaming, these chips quickly found acceptance by professional graphic designers and then were co-opted by data centers and AI developers. The bottom line: they can meet the high computing demands in all of these fields.
Covering the semiconductor sector, Rosenblatt’s Hans Mosesmann, a top-tier analyst ranked 5th among thousands of Wall Street stock experts, has tagged both Nvidia (NASDAQ:NVDA) and Marvell (NASDAQ:MRVL) as must-watch AI stocks ahead of their earnings releases this week. Both companies are industry leaders in chip innovation and are poised to play a pivotal role in the future. Let’s take a closer look.
Nvidia
We’ll start with the leading company in the chip world, Nvidia. This semiconductor giant arguably started the current revolution we’re seeing in chip technology, with its development of the GPU back in 1999. In recent years, Nvidia has benefited enormously from the growth of AI and related tech sectors, and now provides approximately 90% of the GPUs used in generative AI applications. Its success has catapulted the company into the very top tier of Wall Street’s mega-caps; Nvidia today boasts a market cap of approximately $3.11 trillion, making it one of just three $3-trillion-plus companies in the public trading markets.
That hefty growth came along with a massive spike in the share price, to more than $1,100 earlier this year, and Nvidia responded in June with a 10-to-1 stock split. Overall, Nvidia shares are up an impressive 155% year-to-date.
Looking ahead, investors recently expressed some worry about Nvidia, when the company announced that its new B200 Blackwell series chips would face shipping delays of three months. The company has said that it is still on track to maintain production of the product line, but will not be making deliveries until early in 2025. This announcement has the potential to impact major AI-related customers, such as fellow tech giant Microsoft, which have already placed large advance orders for the new chips. While this was grounds for concern, analysts did note that Nvidia’s current chip lines, including the popular Hopper series, continue to show strong sales.
More importantly, the delay in the Blackwell deliveries is not expected to seriously harm Nvidia’s ability to generate revenue. In its most recent quarter, fiscal 1Q25, the company reported revenue of $26 billion, surpassing forecasts by $1.45 billion and marking a staggering 262% year-over-year increase. Nvidia also delivered strong earnings of $6.12 per share, which, after adjusting for the split, equates to 61 cents – 5 cents better than expected.
Nvidia is scheduled to release its fiscal 2Q25 results on Wednesday, August 28, and analysts are expecting the company to post revenues of $28.7 billion and non-GAAP earnings of 64 cents per share. Hitting that revenue line would equate to year-over-year top-line growth of 113%.
Rosenblatt’s top analyst, Mosesmann, remains bullish on Nvidia despite the Blackwell delay. He anticipates the company will surpass expectations once again, stating, “We expect Nvidia to beat and raise its July quarter print and October quarter outlook, with the wildcard being how constrained the company is for Hopper platforms… A few months’ potential delay in Blackwell next year should have a limited impact on Nvidia in what appears to be a significantly constrained environment. Interestingly, we believe we are witnessing a Hopper mid-cycle ‘kicker’ as hyperscalers move to liquid-cooled rack-scale implementations on ‘densification’ efforts by players such as Supermicro. We do not subscribe to the notion of a Hopper to Blackwell air pocket as feared this summer.”
Quantifying his stance, Mosesmann rates NVDA shares as a Buy, with a $200 price target that implies a one-year upside of ~55%. (To watch Mosesmann’s track record, click here)
Overall, Nvidia claims a Strong Buy consensus rating from the Street, based on 35 recent analyst reviews that break down to 32 Buys and 3 Holds. The shares are currently trading for $126.46 and their $149.89 average price target suggests that NVDA will gain 18.5% in the next 12 months. (See Nvidia stock forecast)
Marvell
Next up is Marvell, a semiconductor company that has staked out strong positions in data processing units and has carved out a solid niche by providing chips for a wide range of AI and industrial applications. The company’s products are widely used in data centers and storage accelerators, making them a popular choice among network carriers, wireless providers, automotive manufacturers, and cloud software providers.
Marvell is well-known as an innovator in the industry and has a history of making breakthroughs based on deep expertise and experience. The company can boast that its chipsets have played an important role in recent AI advances and are becoming increasingly important in the field of autonomous automobiles. The key factor here is the high capacity of the company’s chips, suiting them for AI uses, accelerated computing, and other high-end applications.
In the fiscal 1Q25 earnings report, Marvell met the forecasts, with both the top line (quarterly revenue of $1.16 billion) and the bottom line (non-GAAP EPS of 24 cents) aligning with expectations. It’s worth noting that the company’s revenue experienced a 12% decline year-over-year.
For the upcoming fiscal 2Q25 release, analysts expect Marvell to report revenue of $1.25 billion, which would make a year-over-year decline of 6.7% but a quarter-over-quarter gain of 7.7%. Second-quarter earnings are expected to come in at 24 cents per share. We’ll find out on August 29 how the real-world results stack up against the expectations.
Meanwhile, Hans Mosesmann is already expecting that Marvell will measure up well with the upcoming release. He believes that the company has better days ahead of it and outlines why he is bullish on the stock: “We expect Marvell to modestly beat and raise for the July quarter on continued AI-centered segments, including ASICs, electro-optics, and network switches. We see on-premise enterprise stabilizing, with communication infrastructure weakness continuing throughout the calendar year. Management should reiterate AI sales to exceed $1.5B and $2.5B for FY25/FY26, respectively, and also demonstrate confidence in the longer-term 20% AI market share in a $40B TAM by 2028 from the recent 10%.”
“Marvell has reached a cyclical bottom, and the trajectory of the company’s AI business is inflecting on a secular basis. This is particularly significant in areas where Marvell has a unique and defensible expertise,” the analyst added.
Mosesmann goes on to rate MRVL as a Buy, and he puts a $100 price target on the stock, indicating his belief in a 45% gain on the one-year horizon.
From the Street generally, Marvell gets a Strong Buy consensus rating, as the 25 recent analyst reviews include 24 Buy recommendations and just 1 Hold. Currently priced at $68.82, the stock has an average price target of $91.83, indicating nearly 33% upside potential over the next year. (See Marvell stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
