Bank of America Identifies AI Winners Beyond Nvidia
In the rapidly evolving landscape of artificial intelligence (AI), much attention has been paid to leading chipmakers like Nvidia and Broadcom. However, Bank of America underscores a slew of secondary players poised for significant gains amidst the AI frenzy. The bank's analysis offers a fresh perspective, spotlighting three "Buy" rated stocks set to flourish due to AI's expanding footprint.
"The accelerator market, pivotal for generative AI chatbots, is expected to double in the next three years, reaching approximately $200 billion," notes Vivek Arya of Bank of America. This projection hints at a burgeoning opportunity for #2 vendors, aptly dubbed "junior samurAI" by Arya, to carve out profitable niches in the shadow of leaders expanding the market Total Addressable Market (TAM).
Marvell Technology: A Data Infrastructure Beacon
Marvell Technology, known for its data infrastructure-focused semiconductor solutions, is on Arya's radar for its potential in the custom AI chip market. With an upcoming analyst day expected to shed light on its AI strategy, anticipation surges for Marvell to outpace consensus estimates significantly. Arya anticipates a bold declaration of aiming for a 10% long-term share in the custom AI chip market—doubling the current market consensus. Additionally, Marvell's strides in AI Ethernet switching—a market poised to double by 2027—bolster its promising outlook. Bank of America's reaffirmed $95 price target reflects a potential 30% upside.
Micron's Role in the Memory Market Transformation
The high-bandwidth memory market, crucial to AI's advancement, is witnessing a dynamic shift thanks to Micron. Traditionally, new memory demand cycles trigger a supply response that pressures inventory and prices. Yet, the high-bandwidth memory's role in AI introduces a novel scenario where demand swiftly outpaces supply. With a 48% CAGR forecasted through 2027, this segment is expected to soar past $20 billion. Arya's revised $144 price target on Micron acknowledges a potential 15% lift.
AMD's Steady Journey in the AI Accelerator Market
Despite Nvidia's dominance, AMD's diligent execution endears it to Arya, who envisions a sustainable 5% to 10% market share for AMD in the AI accelerator domain. Although ambitions might aim higher, AMD's multifaceted competition underscores a cautious yet optimistic outlook. The company's commitment to leveraging its chiplet architecture for advancement into 3nm node technology for AI products by 2026 reinforces its potential for growth. AMD's maintained $195 price target suggests a modest 7% upside.
In conclusion, amidst a second wave of AI revolution, Bank of America's insights reveal lucrative avenues for investors looking beyond the usual suspects like Nvidia. These "junior samurAI", with their vital roles in the accelerator market and innovative strategies, pave a promising path for stakeholders eager to capitalize on the AI surge.
Analyst comment
Positive news: Bank of America identifies secondary players in the AI market poised for significant gains, offering a fresh perspective and spotlighting three “Buy” rated stocks. The accelerating market is expected to double in the next three years, presenting a burgeoning opportunity for these vendors.
Short analysis: The market for AI accelerators is expected to grow rapidly, creating opportunities for secondary players. Marvell Technology, Micron, and AMD are predicted to outperform and experience growth in their respective markets. Investors can expect potential gains and increased market share for these companies.
