Four semiconductor stocks are proving major winners in the boom of spending related to generative artificial intelligence, a Wall Street analyst says.
In a note to clients late Tuesday, he called them “the four horsemen of AI.” Zino was referring to college football’s Four Horsemen of Notre Dame rather than the biblical Four Horsemen of the Apocalypse.
Zino reiterated his buy ratings on the four semiconductor stocks. He said he sees “a permanent shift in data center infrastructure spend toward accelerators and networking upgrades,” which will benefit the foursome.
Nvidia Leads AI Computing Market
Among those semiconductor stocks, Nvidia has the strongest position in the burgeoning AI market.
“Nvidia has the greatest revenue representation tied to AI, followed by AMD, Broadcom and Marvell,” Zino said.
He added, “We think Nvidia’s GPUs (graphics processing units), software capabilities, recent entry into CPUs (central processing units), and expertise on the networking side make it poised to be a clear standout performer for years to come.”
The emergence of generative AI as a killer application for artificial intelligence kicked off a massive upgrade cycle for data center hardware, Zino said.
Generative AI can create content, including written articles, images, videos and music, from simple descriptive phrases. Artificial intelligence systems analyze and digest vast amounts of data to create new works. Generative AI also can write computer programming code.
Semiconductor Stocks On IBD Tech Leaders List
Meanwhile, Nvidia has transformed from a semiconductor company to a total systems provider.
“When all is said and done, we believe Nvidia will be viewed as the poster child for all things AI (similar to what Apple (AAPL) has meant to mobility, Amazon (AMZN) to e-commerce, and Netflix (NFLX) to streaming),” Zino said.
Investors shouldn’t fear the elevated valuations for the four semiconductor stocks, given the huge growth opportunity ahead, Zino said.
Zino has a 12-month price target on Nvidia stock of 480. His price target is 145 for AMD stock, 975 for Broadcom stock and 70 for Marvell.
On the stock market today, Nvidia stock fell 1.7% to close at 430.45. Meanwhile, AMD stock retreated 5.7% to 112.11. Broadcom sank 1.8% to 847.66. And Marvell dropped 3.3% to 58.85.
All four semiconductor stocks are on the IBD Tech Leaders list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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