By Two chip-related stocks are poised to benefit greatly from the increasing demand for artificial intelligence (AI) semiconductors, according to Raymond James. In a recent analysis, analyst Srini Pajjuri reaffirmed Strong Buy ratings for Nvidia and ASML, highlighting how major technology companies are making strides in monetizing generative AI projects.
Raymond James remains optimistic about the adoption of AI across various industries and sees a promising future for component suppliers. Pajjuri estimated that semiconductor revenue related to Generation AI (Gen AI) grew by 200% in 2023 and expects it to double in 2024.
As of Monday’s trading, Nvidia stock experienced a 3.6% increase, reaching $685.19, while ASML shares faced a slight 0.2% decline, totaling $887.78.
Nvidia holds a leading position as the foremost producer of AI chips for data centers. Its products have become popular among both startups and corporations due to the company’s robust programming platform, CUDA, which offers user-friendly tools for AI application development.
On the other hand, ASML specializes in manufacturing extreme ultraviolet lithography machines that are crucial for producing AI semiconductors. The Dutch company boasts prominent customers such as Taiwan Semiconductor Manufacturing, Samsung Electronics, and Intel.
This earnings season revealed a noticeable impact on hyperscaler company earnings resulting from the monetization of AI. Cloud-computing vendors, including Microsoft and Alphabet, expressed positive sentiments about spending during their recent financial reports. Microsoft anticipates a substantial increase in capital expenditures for the current quarter and intends to continue investing aggressively. Similarly, Alphabet shared plans for notably larger capital expenditures in 2024 compared to 2023.
The demand for AI is a significant driving force behind these infrastructure investments, as highlighted by these tech giants.
(Written by Tae Kim)
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