Nvidia, AMD, Broadcom Among Biggest Beneficiaries Of AI Explosion To $400B Market: Analysts

Mizuho Securities bumped up its price target for chipmakers leveraging artificial intelligence (AI), even as most of these stocks have run up sharply for the year-to-date period.

Strong Ramp-Up: AI chip demand is likely to ramp up steadily in the first half of 2024 before accelerating further in the second half, said analyst Vijay Rakesh in a note.

Ahead of Nvidia Corp.’s NVDA quarterly results, due on Feb. 21, and Broadcom, Inc.’s AVGO, due on March 7, channel checks revealed tight supplies of former’s H100 AI accelerator chipset despite lead times contracting.

That said, “overall demand far outstrips supply,” the analyst said.

The analyst also noted that original design manufacturer Super Micro Computer, Inc. SMCI said demand was up 40% from the second half of 2023, potentially reflecting AI ramps.

Nvidia’s impending B100 launch bodes well for the company’s 2024 guidance, he added.

Nvidia teased the new B100 Blackwell graphics processor last year. The company will reportedly more than double the performance of the newly announced H200.

See Also: Best Artificial Intelligence Stocks

Booming AI Market: Rakesh referred to Mizuho’s market potential estimate of $400 billion for AI by 2027. The analyst said Nvidia will likely win the AI race and therefore raised his 2025 AI revenue estimate for the company from $120 billion to $92 billion, ahead of the Street estimate of $80 billion. In 2027, AI revenue will likely ramp up to $280 billion, he said.

For AMD, the analyst estimates AI revenue of $18 billion by 2027, up from an estimated $3.5 billion+ in 2024. He also expects Intel Corp.’s INTC AI revenue to increase from an estimated $2 billion+ in 2024 to $10 billion.

Broadcom’s AI revenue will likely grow from $8 billion in 2024 to $20 billion in the calendar year 2027, thanks to its custom ASIC AI portfolio, Rakesh said.

The analyst is also positive on Credo Technology Group Holding Ltd CRDO. Total cost of ownership is a positive for the company, given it drives 50% lower Data Center power in AI/Compute server racks.

“We continue to see NVDA as the best AI/ML play, pushing the tip of the spear in AI training performance, as it hosts GTC 2024 on 3/18-21,” the analyst said, adding “We see NVDA, AVGO, CRDO, AMD and INTC driving a strong AI wave.”

Semiconductor Price Target Revisions: The analyst maintained Buy ratings on Nvidia, AMD, Intel, Broadcom and Credo Technology. The upward adjustments to the price targets for the stocks are as follows:

• Nvidia: from $625 to $825
• AMD: from $175 to $200
• Broadcom: from $1,250 to $1,450
• Credo Technology: from $25 to $28

Rakesh maintained his price target for Intel at $55.

Semiconductor Price Action: According to Benzinga Pro data:

• Nvidia last traded up 0.93% at $729.18.
• AMD rose 0.17% at $172.20.
• Broadcom fell 1.53% to $1,245.66.
• Credo Technology moved down 2.18% to $21.98.
• The Philadelphia Semiconductor Index SOXX slipped 1.20% to $620.76.

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