In this article, we will take a detailed look at the Analysts are Recommending These 10 AI Semiconductor Stocks Despite Selloff.
Despite the concerns around AI stock valuations, some analysts believe companies are just getting started with the AI revolution and have a long runway for this bull run. Last month Cantor Fitzgerald analysts said in a note that AI semiconductor companies were positioned well heading into the second-quarter earnings season. They also said strengths in NAND and HDD markets and fiscal discipline make data storage companies attractive.
“We continue to believe that AI-leveraged names are still the most attractive to own heading into earnings,” Cantor analysts led by C.J. Muse said.
Cantor’s analysts said that companies that make semiconductor equipment are still in the early cycle of recovery.
“We are now five quarters into the recovery versus the average typical cycle of nine quarters and believe this cycle will be even more elongated,” they said.
Deutsche Bank also expects strong performance from AI-driven semiconductor stocks in the second-quarter earnings season. However, the firm observes that investors are becoming more selective. Analyst Ross Seymore highlighted that while optimism persists around the current AI leaders, there is growing caution about which companies will sustain or begin to show financial gains amid lingering uncertainty about the momentum’s longevity.
Melissa Weathers, another Deutsche Bank analyst, noted that semiconductor stocks have surged by 10-20% or more since the beginning of the second quarter, with price-to-earnings ratios approaching or exceeding previous highs. She emphasized that future upward movement will likely depend on revisions to earnings estimates.
For this article we picked 10 AI semiconductor stocks Deutsche Bank and Cantor Fitzgerlad are bullish on. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. NXP Semiconductors NV (NASDAQ:NXPI)
Number of Hedge Fund Investors: 40
Cantor Fitzgerald increased its price target for NXP to $350 from $325. The new price target presents an upside potential of 33%.
NXP Semiconductors is not directly exposed to the AI or data center chips market. The company makes chips for IoT, industrial applications and cars. Amid a slowing automotive demand, some analysts are reluctant about NXP. However, some of the demand headwinds in the automotive segment could be offset by growth in hybrid control units and 48V systems, in addition to radar transceivers, ADAS components, and UWB connectivity. The company’s strengths in 32-bit Microcontrollers (MCUs) and RFID could also boost the stock in the future. NXP’s gross margins are stable at around 58%, with operating margins expected to rise from 35% in FY’24 to 36% over two years. Free cash flow margins should improve to the mid-20% range, translating into a 10% FCF growth.
NXPI shares are trading at a forward P/E ratio of 18.55, much lower than the industry average of 25. The stock could be a long-term buy for patient investors.
Aristotle Large Cap Growth Strategy made the following comment about NXP Semiconductors N.V. (NASDAQ:NXPI) in its Q3 2023 investor letter:
“We sold NXP Semiconductors N.V. (NASDAQ:NXPI) to reduce our exposure to the automotive sector in semiconductors following the strong returns over the past 3 years. We are seeing early data of slowing global auto sales due to macroeconomic conditions and higher interest rates. While we think this may be a shorter-term slowdown, the risk is increasing of elevated inventory levels and pricing headwinds.”
9. Western Digital Corp (NASDAQ:WDC)
Number of Hedge Fund Investors: 65
Western Digital Corp (NASDAQ:WDC) is one of the top semiconductor picks of Cantor Fitzgerald. The company recently reported quarterly results. Cloud segment revenue jumped 20% on a sequential basis. Overall, the company is seeing a rise in profits amid higher pricing and a shift to premium high-performance products. The cloud business, particularly in high-capacity HDDs for data centers, remains strong.
What are AI-related growth catalysts for Western Digital? How can an SSD and storage devices company be called an AI stock?
The rise of artificial intelligence and its data demands positively impact both HDD and flash demand. Generative AI apps and machine learning require substantial data storage, a tailwind for Western Digital. The company is well-positioned to capitalize on this trend, which is still in its early stages.
During fiscal Q3 earnings call the company’s management talked about AI-related business trends:
“I would say about the AI demand as it’s coming into focus. I don’t think it’s so much in the results just yet, but we’re seeing where it’s going to impact both businesses. And clearly, one of them you just outlined, which is we’re seeing enterprise SSD demand return, we saw some increase in the last quarter. We expect some increase in this quarter. But really, as we look to the second half, we have customers coming to us wanting the kind of SSDs we built and qualified before the downturn. They just want them in much bigger capacity points, 30 and 60 terabyte capacity points. So it’s the same product just taking it and increasing capacity and going through a qualification on that so we’re in that process with customers.
We also introduced a new SSD that’s more compute focused, which is PCIe Gen 5 product based on BiCS 6, very high performance that plays a little bit different role in the AI training stack and we’re getting very good feedback on that product. It’s being qualified by our starting qualification, we samples. We’re kind of getting rid of the qualification of the hyperscaler and we’re seeing good demand in the enterprise market as well. So we feel like the portfolio set up well as we go into the second half, and we’re seeing a lot of demand show up for people that are very building large amount of infrastructure for model training.”
read the full earnings call transcript here.
8. ASML Holding NV (NASDAQ:ASML)
Number of Hedge Fund Investors: 75
ASML is also among the top semiconductor picks of Cantor.
ASML Holding NV (NASDAQ:ASML) has a near monopoly in the semiconductor industry as it machines used by chip manufacturers use to make physical chips.
ASML Holding NV (NASDAQ:ASML) supplies ultraviolet lithography photolithography machines used to manufacture advanced 3nm and 5nm chips. Jim Kelleher of Argus has set a $1,000 price target on the stock. Over the past one year ASML Holding NV (NASDAQ:ASML) shares have gained about 35%.
ASML was one of the stocks pitched during the SOHN Conference this year. Vijay Shilpiekandula of Dilation Capital, who was named the Sohn Idea Contest Winner, presented ASML as his best stock idea.
“What I find like good opportunity for investors in the market to think about right now is to be creative about the long-term capacities and the long-term earnings potential of this company based on this gold rush that all these memory makers and large language models are chasing,” Shilpiekandula said
Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
7. Qualcomm Inc (NASDAQ:QCOM)
Number of Hedge Fund Investors: 78
Cantor Fitzgerald increased its price target for QCOM to $215 from $190.
QUALCOMM Inc (NASDAQ:QCOM) was seen as a laggard in the AI arms race but all of a sudden the stock has a new growth catalyst: AI PCs. Microsoft has announced that its Surface Laptop and Surface Pro will be powered by QUALCOMM Inc (NASDAQ:QCOM) chips. These devices can run several AI tasks without the internet. QUALCOMM Inc (NASDAQ:QCOM) is a key partner of Microsoft to deliver Copilot+ PCs.
In addition to AI PCs, AI smartphones is another emerging growth catalyst for QUALCOMM Inc (NASDAQ:QCOM). The company’s Snapdragon 8 Gen 3 Mobile Platform can power smartphones to process up to 10 billion parameters of generative AI models, effectively making them intelligent personal assistants.
Wall Street expects Qualcomm’s revenue to grow 10% in 2025 and earnings to rise by 13.10% in the year. Despite these growth catalysts, QUALCOMM Inc (NASDAQ:QCOM) is trading at a forward P/E of 20, lower than the industry median of 23.73.
Aristotle Capital Value Equity Strategy stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q2 2024 investor letter:
“QUALCOMM Incorporated (NASDAQ:QCOM), a leading wireless communications technology company, was the largest contributor for the quarter. After a period of weaker global demand for smartphones (driven by a slowdown in China) and elevated channel inventory, demand from Chinese handset manufacturers accelerated 40% year‐over‐year. More importantly, in our opinion, Qualcomm continues to execute on a previously identified catalyst of shifting its business mix beyond smartphones. The company announced increased progress for its automotive and Internet of Things (IoT)solutions. Within auto, the increase in vehicle content has resulted in 35% year‐over‐year revenue growth, with a design win pipeline of ~$45 billion, keeping the company on track to achieving ~$4 billion in auto‐related revenues by 2026. In recent years, despite persistent threats of insourcing from large clients (most notably Apple), Qualcomm has been able to retain its high market share in handsets while simultaneously expanding in non‐smartphone devices. We believe this progress is a testament to Qualcomm’s history of high (and productive) R&D spending, resulting in technological superiority. We believe Qualcomm’s technologies will continue to benefit as the world stays on a path toward a proliferation of connectivity between varying devices and as AI applications extend from the cloud to on‐device.”
6. Applied Materials, Inc (NASDAQ:AMAT)
Number of Hedge Fund Investors: 79
AMAT is another AI semi stock Cantor is bullish on.
Analysts at Stifel kept a bullish on on Applied Materials, Inc. (NASDAQ:AMAT) after attending Semicon West 2024 in San Francisco. Brian Chin and Denis Pyatchanin believe Taiwan Semiconductor’s continued spending will benefit the stock. They increased the stock’s price target to $275 from $240.
“Ultimately, we see Applied Materials, Inc. (NASDAQ:AMAT) as well on track to establish higher peak revenue/profitability through the ensuing upcycle, and warranting a higher multiple as it demonstrates improved financial performance across the cycle, and in particular during the downturn,” they said.
Applied Materials, Inc. (NASDAQ:AMAT) is one of those non-fancy AI stocks that don’t get much limelight from the Wall Street. The stock, up 59% this year so far, received an upgrade from Barclays. The investment firm expects the stock to benefit from higher spending in the semiconductor equipment industry. Barclays expects wafer fab equipment spending to hit $96.3 billion in 2024 and $106.4 billion in 2025, up from its previous estimate of $80.6 billion and $89.1 billion, respectively.
In May, Applied Materials, Inc. (NASDAQ:AMAT) posted solid Q2 results. Mizuho Securities analyst Vijay Rakesh upped his price target on the stock to $245 from $225 and kept his Buy rating. Citi analyst Atif Malik also increased his price target on the stock to $250 from $170. The analyst sees “further upside” to Applied Materials, Inc.’s (NASDAQ:AMAT) 2025 estimates.
Applied Materials, Inc.’s (NASDAQ:AMAT) moat is strong and wide. The company makes equipment used to make semiconductor chips. It has a diverse equipment portfolio that addresses the high-growth ICAPS industry (IoT, Communications, Automotive, Power, and Sensors). Last year Applied Materials, Inc. (NASDAQ:AMAT) made a breakthrough announcement by launching Centura Sculpta, a machine that dramatically reduces the number of steps required in chips production. Applied Materials, Inc. (NASDAQ:AMAT) said chipmakers can save a whopping $250 million per 100K wafer starts per month of production capacity in costs.
Wall Street expects Applied Materials, Inc.’s (NASDAQ:AMAT)’ revenue to surge 11% in 2025 while earnings growth is forecasted to come in at 15.60% in the year. The stock’s forward P/E is 23.73, not much higher than the industry average of 27, when seen in the context of growth.
5. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 87
Deutsche Bank is also bullish on MRVL.
JPMorgan believes MRVL could “dominate” the custom application-specific integrated circuit, or ASIC, market. Analysts at JPMorgan estimate that Marvell Technology Inc (NASDAQ:MRVL) could generate between $1.6 billion and $1.8 billion in AI revenue from ASICs and networking this year and between $2.8 billion and $3 billion next year.
Marvell Technology Inc (NASDAQ:MRVL) shares recently tumbled following mixed Q1 results. However, some analysts believe the stock could be an opportunity to buy on the dip. Oppenheimer analyst Rick Schafer maintained his outperform rating on the stock and upped his price target to $90 from $80.
Analysts believe that Marvell Technology Inc. (NASDAQ:MRVL) could be the next major AI play as Marvell Technology Inc. (NASDAQ:MRVL) begins to roll out AI-specific products like Spica™ 800G PAM4 DSP platform for optical interconnects. Marvell Technology Inc. (NASDAQ:MRVL) also sells Application-specific integrated circuits (ASICs) for data centers, which are seeing a huge boost amid the AI revolution.
According to data compiled by Yahoo Finance, average Wall Street price target for Marvell Technology Inc. (NASDAQ:MRVL) is $87.7, which represents a 14% upside potential from the current levels.
However, Marvell Technology Inc’s (NASDAQ:MRVL) negative revenue growth has alarmed many especially when peers are growing at a faster pace. In the first quarter, revenue fell 12.2% on a YoY basis. Marvell Technology Inc (NASDAQ:MRVL) has a $3 billion of net debt. In fiscal 2025, Marvell Technology Inc’s (NASDAQ:MRVL) FCF is expected to come in at $1 billion, excluding taxes and management’s stock options. While the stock’s PE ratio (TTM) is 52, it’s trading at 32X 2025 EPS estimate. This makes Marvell Technology Inc. (NASDAQ:MRVL) a stock to consider only for the long-term. In the short-term there are much better options to invest in the AI space other than Marvell Technology Inc. (NASDAQ:MRVL).
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
4. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Investors: 115
Cantor is also bullish on MU.
Bank of America analyst Vivek Arya recently talked about the latest declines in semiconductor stocks. However, the analyst said most of the declines were due to temporary factors and fundamentals are still “intact.”
“AI still the strongest and most dependable area of capex, driven by domestic US tech companies with solid balance sheets, proven monetization and mission-critical imperatives…” Arya said.
Micron Technology Inc (NASDAQ:MU) posted quarterly results earlier recently which came in better than expected but the market didn’t welcome the in-line guidance and rising expenses. However, this short-term view misses the fact that Micron Technology Inc (NASDAQ:MU) is investing heavily in high bandwidth memory (HBM) production that is expected to generate billions in sales by fiscal 2025 compared with just hundreds of millions in 2024.
After the earnings, Arya reiterated a Buy rating and gave a $170 price target on Micron Technology Inc (NASDAQ:MU).
“Mgmt emphasized both CY24 and CY25 volumes are now fully sold out with pricing generally secured, providing visibility to its healthy sales and margin expansions (HBM is GM accretive),” Arya said.
Here is what Micron Technology Inc (NASDAQ:MU) said about HBM during fiscal Q3 earnings call:
“Our HBM shipment ramp began in fiscal Q3, and we generated over $100 million in HBM3E revenue in the quarter, at margins accretive to DRAM and overall Company margins. We expect to generate several hundred million dollars of revenue from HBM in fiscal 2024 and multiple billions of dollars in revenue from HBM in fiscal 2025. We expect to achieve HBM market share commensurate with our overall DRAM market share sometime in calendar 2025. Our HBM is sold out for calendar 2024 and 2025, with pricing already contracted for the overwhelming majority of our 2025 supply. We are making significant strides toward expanding our HBM customer base in calendar 2025, as we design-in our industry-leading HBM technology with major HBM customers. We have sampled our 12-high HBM3E product and expect to ramp it into high-volume production in calendar 2025 and increase in mix throughout 2025.”
ClearBridge Value Equity Strategy stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Stock selection in the IT sector proved to be the largest contributor to performance, particularly driven by the strong performance of Micron Technology, Inc. (NASDAQ:MU) The company, which designs, develops, manufactures and sells memory and storage products, continued its strong performance alongside other AI beneficiaries as the anticipated demand for new and additional storage essential for housing and training large language AI models continues to grow.”
3. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 115
Cantor Fitzgerald is also bullish on AVGO.
TD Cowen in a fresh note named Broadcom Inc (NASDAQ:AVGO) as one of the stocks that can benefit from the rise in AI spending. Analysts at the firm said there are “no signs” of generative AI demand abating and highlighted that Broadcom Inc (NASDAQ:AVGO) recently raised its full-year AI outlook. Broadcom Inc (NASDAQ:AVGO) expects AI-related revenue for 2024 at $11 billion.
Broadcom Inc (NASDAQ:AVGO) recently reported second-quarter results. Revenue in the quarter rose about 43% year over year. AI revenue in the period rose a whopping 280% year over year. Broadcom’s revenue stream is diverse and does not rely on a single source. It includes enterprise, networking, storage, data center/hyperscaler, industrial, and consumer space. For 2024 AVGO has increased its annual revenue guidance to over $51 billion, anticipating growth of over 40%. A significant portion of this growth is expected to come from software, which would also help margins.
The company’s Ethernet business is also strong amid partnerships with Arista Networks (ANET), while the company is also collaborating with Dell (DELL), Juniper (JNPR), and Super Micro (SMCI) in the networking business and other segments. Broadcom has also developed ASIC AI chips in partnership with Google and Meta Platforms.
Based on this strong growth and upcoming catalysts, AVGO’s forward P/E of about 25 makes the stock look undervalued.
ClearBridge Global Growth Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its first quarter 2024 investor letter:
“Among secular growth names, Broadcom Inc. (NASDAQ:AVGO) was another notable addition. Through organic growth and accretive acquisitions, Broadcom has developed into one of the largest global technology providers serving a number of industries with its semiconductor and software products. The company generates high levels of earnings and free cash flow, which will be driven in the coming years by revenue growth and margin expansion due to the acquisition of VMware and strong adoption of the Broadcom’s AI custom silicon chips. The acquisition of VMware is off to a good start and has shifted the business mix to 60% software and 40% semiconductors, enhancing growth prospects while also providing greater downside protection from higher recurring revenue.”
2. Advanced Micro Devices, Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 124
Cantor Fitzgerlad recently increased its price target for AMD to $200 from $170.
Morgan Stanley’s Joseph Moore said while he likes AMD’s story, he sees “limited upward revision potential for AI from here and we move to EW, with a preference for NVDA and AVGO among large cap AI semis.”
Advanced Micro Devices, Inc (NASDAQ:AMD) impressed Wall Street with solid second-quarter results amid strong data center revenue. Data center revenue in the period grew 49% year over year.
But can Advanced Micro Devices, Inc (NASDAQ:AMD) continue gaining in the coming months? Analysts are hopeful amid the launch of its Instinct™ MI300 Series accelerators that are designed for AI and HPC workloads. The new chip competes with Nvidia’s H100 AI chip. Advanced Micro Devices, Inc (NASDAQ:AMD) now plans to release new AI chips annually, including the MI325X in Q4 this year, the MI350 in 2025, and the MI400 in 2026. Advanced Micro Devices, Inc (NASDAQ:AMD) said MI350 would be a competitor to Nvidia’s Blackwell.
Advanced Micro Devices, Inc (NASDAQ:AMD) data center business doubled its revenue but this growth was not at the cost of profits. The segment’s operating income increased by 405% compared to the year-earlier period. However, Advanced Micro Devices, Inc (NASDAQ:AMD) data center business is still very small compared with NVDA. It generated about $2.8 billion in revenue vs. $22.6 billion in quarterly revenue for NVDA. However, Advanced Micro Devices, Inc (NASDAQ:AMD) CPU and GPU businesses are also thriving. Ryzen CPU sales increased 49% over year and slightly quarter over quarter. Although gaming revenue declined 59% due to decreased PlayStation and Xbox sales, Advanced Micro Devices, Inc (NASDAQ:AMD) Radeon 6000 GPUs saw a year-over-year sales increase.
Advanced Micro Devices, Inc (NASDAQ:AMD) is trading 17% below its 3-year average P/E ratio. The company is estimated to grow its EPS by 43% in the long term, compared to 33% for Nvidia. During the third quarter, its revenue growth is expected to come in at 15% on a QoQ basis. Amid growth forecasts based on new chips and an expected increase in AI spending by other companies, Advanced Micro Devices, Inc (NASDAQ:AMD) forward P/E of 38 makes the stock undervalued at the current levels.
Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 186
NVIDIA Corporation (NASDAQ:NVDA) is one of the top semiconductor picks of Cantor Fitzgerald.
NVIDIA Corp (NASDAQ:NVDA) shares are on the decline amid valuation concerns. However, Morgan Stanley re-added the stock to its top picks list. Analyst Joseph Moore said:
“Visibility will actually increase as demand moves from Hopper to Blackwell, as the constraint will shift back to silicon; H100 lead times are short, but H200 lead times are already long, and Blackwell should be even longer,” the firm said.
However, the latest big tech earnings have raised some concerns on NVIDIA Corp (NASDAQ:NVDA) future growth trajectory. The company’s major customers including Meta Platforms and Alphabet have indicated that they may be overbuilding and overspending on AI chips. NVIDIA Corp (NASDAQ:NVDA) is selling about 2 million of its GPUs on an annual basis based on 2023 data. As demand moderates and competitors up their production, the company won’t be able to sustain its current growth trajectory.
Raymond James analyst Javed Mirza recently said in a report that NVDA has “triggered a mechanical sell signal” based on a moving average convergence/divergence indicator. In a technical analysis report, he stated that the stock is trading below its 50-day moving average and exhibiting early signs of selling pressure. This, according to Mirza, shows there is a looming corrective phase lasting 1-3 months. He added that a sustained break below the 50-day moving average could lead to a decline towards 94.94, representing a further 16.9% drop from current levels.
Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“In the second quarter, the dominant narrative in markets continued to be generative AI (GenAI). If it wasn’t immediately evident from NVIDIA Corporation’s (NASDAQ:NVDA) meteoric rise to among the largest companies in the world, one need only look so far as the Semiconductor and Technology Hardware industries as a gauge of sentiment, collectively accounting for greater than 70% of the Russell 1000 Growth (“the Index”) and 85% of the S&P 500 headline return quarter to date.
Our Portfolio has no exposure to NVIDIA or other Semiconductor companies currently benefiting from demand for foundational AI Hardware. The largest relative detractors in the quarter were NVIDIA, Apple, and Salesforce.
For the second quarter in a row, NVIDIA represented the top detractor to relative performance as the stock climbed another 37%, bringing the year-to-date return to +150%. As of this writing, NVIDIA is the third largest company in the world, but for a brief moment, it surpassed Microsoft to become the largest company in the world. Yet again, the company delivered blowout results that surpassed already lofty expectations, reinforcing the narrative that NVIDIA is the only obvious “AI winner” due to the amount of revenue it is currently generating.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
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