Nvidia (NVDA) has been a behemoth in the semiconductor industry, fostering immense wealth for its long-term investors. Over the past decade alone, Nvidia stock has delivered a jaw-dropping return of over 14,100%, transforming a $10,000 investment into a staggering $1.4 million. With a market cap of $1.39 trillion, Nvidia’s position as one of the world’s largest companies is unquestionable. While it rides the tidal wave of the artificial intelligence (AI) revolution, numerous other top-rated AI chip stocks deserve the spotlight. Here are three such noteworthy contenders.
Broadcom Stock
Valued at a market cap of $518 billion, Broadcom (AVGO) is a standout semiconductor stock. Over the years, Broadcom has strategically acquired several companies, bolstering its arsenal of data storage, optical, and wireless chips. Formerly known as Avago Technologies, the company underwent a pivotal transformation when it acquired Broadcom for $37 billion in 2016, subsequently adopting the Broadcom moniker. Subsequent strategic acquisitions including CA Technologies and Symantec’s enterprise security business have granted Broadcom a more diversified revenue base. Notably, Broadcom has demonstrated robust financial performance, with an impressive 15% annual increase in sales between fiscal 2016 and fiscal 2023. The company’s gross margins also surged from 60.5% to 74.7% in the same period, culminating in a commendable 21% growth in adjusted earnings. Analyst sentiment leans heavily towards “strong buy,” with 18 out of 22 analysts recommending a bullish stance, underpinning the company’s growth potential.
Marvell Technology Stock
Marvell Technology (MRVL) recently disclosed its fiscal Q3 2024 results, which exhibited an 8% year-over-year decline in sales to $1.42 billion. Although adjusted earnings also witnessed a 28% descent to $0.41 per share, MRVL surpassed analysts’ revenue and EPS projections. However, the company’s fiscal Q4 sales and earnings projections fell short of estimates, primarily attributable to weakness in segments such as on-premise data centers and enterprise networking. Looking ahead, a turnaround is anticipated in fiscal 2025, featuring a projected 11.47% surge in sales and a substantial 34.67% growth in earnings. Analyst sentiment echoes confidence, with the majority advocating a “strong buy” stance, reinforcing the company’s growth trajectory.
Monolithic Power Stock
Closing the triumvirate is Monolithic Power (MPWR), valued at $28.59 billion by market cap. Focused on designing and manufacturing integrated power semiconductor solutions, Monolithic Power serves diverse markets encompassing computing, storage, automotive, industrial, communications, and consumer applications. In its Q3 2023 earnings release, the company matched analyst expectations with reported revenue of $475 million and adjusted earnings of $3.08 per share. While MPWR stock sports a relatively expensive valuation at 45 times 2024 earnings, bullish analysts foresee heightened AI demand propelling future cash flows and revenue. Analyst consensus leans heavily towards a positive outlook, with the majority recommending either a “strong buy” or “moderate buy,” further affirming the company’s favorable standing in the market.
