From Nvidia to Others: Wall Street's Hunt for the Next AI Investment Opportunity

After rising more than 239% last year, AI chip giant $NVIDIA(NVDA.US)$continues to ride the AI wave and record a 72% increase in 2024. Last Friday, NVIDIA's market cap surpassed a milestone of $2 trillion, making it not only the third largest US company after Microsoft and Apple, but also replacing Saudi Aramco as the world's third largest listed company by market value. According to Colette Kress, the company's CFO, despite NVIDIA's efforts to increase supply, there is still a large unmet demand for H100, as well as strong demand for new generation AI chips such as H200 and B100. NVIDIA's competitor in the AI chip field, $Advanced Micro Devices(AMD.US)$ , has also seen a nearly 40% increase this year.

$Broadcom(AVGO.US)$: JPMorgan analyst Harlan Sur initiated coverage of another "shovel seller" of AI, $Broadcom(AVGO.US)$, giving an Overweight rating and a $1,550 target price. Furthermore, the firm has included Broadcom on its list of recommended stocks for U.S. Equity Analysts. Sur has acknowledged Broadcom's leadership positions in semiconductor technology, particularly its position as the second-largest global supplier of AI semiconductors with an estimated revenue of over $8 billion in 2024, and its role as a major supplier of custom chip ASICs.

$Marvell Technology(MRVL.US)$: Marvell, a semiconductor company that is currently preparing to expand its AI ASIC business, has received a buy rating from Citigroup. Analyst Atif Malik pointed out that Marvell has the potential to become a leading provider of high-compute ASICs. The projected growth in sales of custom AI ASICs is expected to account for a significant portion of the total AI sales by 2025.

$Taiwan Semiconductor(TSM.US)$: King Lip, Chief Investment Strategist at Baker Avenue Wealth Management, has reduced its position in NVIDIA and increased holdings in key supplier TSMC.

Que Nguyen, Chief Investment Officer of Stocks at Research Affiliates, is also optimistic about the semiconductor industry and has established positions in $Lam Research(LRCX.US)$, which provides semiconductor equipment, and $Micron Technology(MU.US)$, which produces storage chips.

$Dell Technologies(DELL.US)$: After Dell, one of the world's largest server manufacturers, released its fourth fiscal quarter ended on February 2 last week, its stock price soared 31%. It has risen nearly 60% so far this year, and the main driving force behind it is the surge in demand for AI servers. The company's Q4 AI server sales grew rapidly, and its net profit far exceeded market expectations. According to Jeff Clarke, vice chairman, and chief operating officer of Dell, its orders for AI-optimized servers grew 40% sequentially and backlog doubled to $2.9 billion.

$Super Micro Computer(SMCI.US)$: Another AI server maker, Super Micro, has continued to rise impressively by 278% this year after a 250% surge last year, and has been included in the $S&P 500 Index(.SPX.US)$.

As internet data centers will require more computing power and network bandwidth to handle AI workloads, computer equipment manufacturer $Arista Networks(ANET.US)$ has also risen by over 22% this year.

In terms of software, in addition to Microsoft, many other software companies, including $Salesforce(CRM.US)$ and $ServiceNow(NOW.US)$, are also striving to monetize AI products.

Some institutions have also noticed the need for AI-related cybersecurity. While holding positions in NVIDIA, the asset manager and ETF issuer Spear Invest has also allocated shares in cybersecurity company $Zscaler(ZS.US)$ in its Spear Alpha ETF. Other cybersecurity companies that may be related to AI include $Palo Alto Networks(PANW.US)$, $CrowdStrike(CRWD.US)$, $MongoDB(MDB.US)$, $SentinelOne(S.US)$ and $Cloudflare(NET.US)$.