Wall Street analysts are betting on these 2 stocks positioned to capitalize on the artificial intelligence wave, exhibiting growth potential akin to Nvidia’s in the past year.
Nvidia has conquered the AI chip market with phenomenal growth and unprecedented technology leadership. In 2024 alone, its shares have risen 130%, pushing the company to a market capitalization of $3 trillion, among the top 10 in the world. This success is partly due to CEO Jensen Huang’s announcement of Rubin’s next chip, expected in 2026, which will include new GPUs, CPUs, and networking chips.
However, the technology ecosystem is constantly evolving, and new companies are emerging with equally promising growth potential. 2 stocks could follow in Nvidia’s footsteps and dominate the AI market. These companies are leveraging disruptive technological innovations and positioning themselves as leaders in the industries they serve.
1. Broadcom
- Broadcom graph
- Source: Tradingview
Broadcom is a giant in the semiconductor industry, but with a different focus than Nvidia. While Nvidia stands out for its GPUs capable of managing complex artificial intelligence models, Broadcom focuses on ASICs (Application-Specific Integrated Circuits), chips designed for specific tasks that offer greater efficiency and power for targeted applications.
The demand for ASICs for artificial intelligence is growing rapidly. Morgan Stanley predicts an annual increase of 85% through 2027, with a market that could generate $30 billion per year. Broadcom, with a 35% market share, is uniquely positioned to capitalize on this expansion. Its strong customer base, including Meta Platforms and Alphabet, further strengthens its position. According to forecasts by JPMorgan, Meta could contribute billions of dollars to Broadcom’s revenue, while Alphabet is close to integrating the company’s chips into its AI-based work processes, bringing in revenue related to AI to $9 billion in 2024, tripling from the previous year.
- Broadcom target price
- Source: TipRanks
Broadcom’s prospects are extremely promising. The company expects AI chip sales of between $10 billion and $12 billion this year, with estimates from Mizuho indicating that this revenue could reach $20 billion by 2027. Analysts expect a 15% increase in earnings % per annum for the next five years, but growth could accelerate as the AI market expands.
Broadcom shares, currently trading at 29 times forward earnings, present a more favorable valuation than Nvidia’s multiple of 43. This could represent an interesting investment opportunity, as the market could reward Broadcom with a higher multiple, fueled by growth in artificial intelligence, leading to significant long-term gains.
2. Trade Desk
Trade Desk is among the most innovative companies in the digital advertising sector that is leveraging artificial intelligence to gain a leading position in a constantly growing market. Since the beginning of the year, the company has demonstrated an excellent performance on the stock market, with a 30% increase in its value on the Nasdaq.
- TTD margins growth
- Source: Yahoo! Finance
In 2023, the company achieved a 23% increase in revenue, which grew to $1.95 billion. The first quarter of 2024 confirmed this positive trend, recording revenue growth of 28% year-over-year, higher than the previous year’s 21%.
- TTD’s EPS
- Source: TheMotleyFool
In a context where the digital advertising market shows an annual growth of 10.7% in 2023 and is expected to increase to 13.2% in 2024, the performance of the Trade Desk testifies to its success in gaining an increasingly significant share of this expanding market, thanks also to its implementation of artificial intelligence. Since 2018, the company has integrated AI into its tools to optimize ad buying and maximize return on advertising investments. With the launch of the Kokai platform last year, capable of processing 13 million ad impressions per second, The Trade Desk offers advertisers the ability to reach their target audiences accurately and at the best time.
While not completely dominating the digital advertising market, its growing market share and continued innovation in AI position it as a serious competitor in the arena. With the potential to maintain sustained earnings growth over the long term, The Trade Desk emerges as an intriguing option for investors looking for a winning stock in the digital advertising landscape.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.| Original article published on Money.it Italy 2024-06-05 16:22:00. Original title: Quale sarà la prossima Nvidia? 2 azioni pronte a dominare il mercato AI
