J.P. Morgan says there are three semiconductor companies that will thrive from the rising demand for artificial-intelligence services and software.
In a note to clients on Friday, analyst Harlan Sur said
) are best positioned to sell their chips to technology giants building AI products. He has Overweight ratings on Nvidia and Marvell, and no rating on Broadcom.
This week, both
‘s Google (GOOGL) and
(MSFT) unveiled AI-powered conversational chat bot companions for their search engines. A wave of interest in new AI products has been sparked by OpenAI’s release of ChatGPT late last year.
The analyst has a $220 price target on Nvidia stock, and $72 price target on Marvell stock.
Nvidia “is the clear leader in this [AI] market with its silicon, software, hardware systems and full-stack ecosystem for training/deploying these complex models,” Sur wrote. AI will also “require significant high-speed networking capabilities—areas of strong leadership for Broadcom and Marvell.”
In Friday trading, Nvidia stock is down 3.9% to $214.64; Broadcom stock is 1% lower to $593.74; Marvell stock is down 1.7% to $44.35.
For Broadcom, Sur cited how the company co-designed Google’s flagship AI processor chip in 2016 and has helped the internet company make several AI chips over the last few years. He expects Broadcom to benefit from rising demand for the Google chips on the back of a rollout of its AI chatbot.
Finally, Marvell is attractive because it also sells cloud-computing chips to Microsoft, Google, and
(META), the parent of Facebook and Instagram.
“We believe Marvell and Broadcom have a very defensible business in a period of macro uncertainty given their strong exposure to strategic infrastructure and AI/accelerated compute end markets,” the analyst wrote.
Write to Tae Kim at [email protected]