The already significant growth in AI chip stocks has captured the attention of investors and analysts alike. Citi's recent projections have brought one particular AI chip stock into the spotlight, with the firm forecasting a potential surge in the near term.
As the demand for advanced AI capabilities continues to expand across industries, Citi sees one name making gains over the next month, ahead of a key event, signaling a potential opportunity for investors.
Rally in AI chip stocks
The AI chip sector has experienced a notable rally in recent times, fueled by the increasing integration of artificial intelligence. The escalating demand for AI-driven technologies across industries has propelled the need for sophisticated AI chips, creating a robust market for companies operating in this space.
The rapid advancements in AI applications, including machine learning, natural language processing, and computer vision, have heightened the requirement for high-performance AI chips, driving the growth in share prices of companies in this sector.
The expansion of AI infrastructure within cloud computing and edge computing environments has further catalyzed the surge in AI chip stocks as companies seek to enhance their capabilities in processing and executing AI workloads.
Nvidia (NASDAQ:NVDA) has been the primary beneficiary of the AI surge. As demand has significantly increased, its stock has gained around 88% this year and more than 244% over the last 12 months.
AMD (NASDAQ:AMD) is another name that benefits from AI. Although its gains have been more subdued compared to NVIDIA, it is up more than 23% in 2024 and has gained over 81% in the last 12 months.
With demand for AI yet to show any significant signs of a slowdown, analysts see stocks in the AI chip space continuing to benefit, with Citi highlighting one that they believe is set to rise.
Citi is bullish on Marvell stock
In a note to clients Wednesday, analysts at the investment bank opened a 30-day positive catalyst watch on Marvell Technology Inc (NASDAQ:MRVL) ahead of the company’s AI Era investor event on April 11th.
“Recent stock under performance post weaker than expected Apr-Q guide on non-core enterprise networking/carrier infrastructure end markets and optical concerns around [the] use of copper-based connectivity solutions such as the NVLink Switch during GTC offers an 18% valuation discount to AI peers,” stated Citi.
They added: “Moreover, our discussions at OFC this week point to stable optical DSP $ content and no major signs of hyperscale LPO/CPO adoption.”
At the event, Citi expects Marvell to talk about an estimated $40 billion custom ASIC total addressable market by 2027 and custom ASIC ramps, including AWS Trainium 2 (5nm)/Arm-based CPUs.
“We note that AI-exposed peer stocks like NVDA, AVGO, and AMD moved up into their respective AI days and the setup appears similar for MRVL after the recent pullback,” concluded the firm.