We recently compiled a list of the 10 AI Stocks That Will Skyrocket. In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against the other AI stocks.
DWS, an expert in active, passive, and alternative asset management, believes that expectations around the usage of Artificial Intelligence (AI) across industries acted as one of the critical stock market drivers over the previous 2 years. In 2025, AI developments are expected to make significant strides throughout various domains. The firm anticipates a shift from generalized applications to industry-specific solutions. Notably, companies are expected to refine their strategies to target specific use cases providing measurable results.
Generative AI CapEx Will Continue to Increase, Says DWS
DWS, while quoting Bloomberg estimates, highlighted that some of the big technology firms can collectively increase capex to ~$200 billion in 2025. More than $90 billion in incremental capital spending in 2024-25 vs. 2023 is projected to be earmarked mainly for expanding Gen AI infrastructure. On a related note, Goldman Sachs Asset Management believes that the AI capex from well-established hyperscalers is projected to surpass $250 billion in 2025. This hints at optimism that hyperscalers remain confident in the ROI (Return on Investment) they will witness from such significant investments.
DWS sees the de-globalization movement spreading to data and AI, with countries spending a significant amount to subsidize “sovereign AI.” To provide a brief overview, it refers to a nation’s capabilities to establish, control, and deploy its own AI technologies. It spans both physical and data infrastructures. Notably, in the past year, the governments of the US and China have pledged $40 billion – $50 billion each dedicated towards AI investments.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Key AI Trends to Watch Out
Appinventiv believes that conversational AI, Predictive Analytics, AI Democratization, Agentic AI, and Generative AI, among others, are some of the key trends to watch out for. While conversational AI focuses on streamlining customer interactions, generative AI has been revolutionizing content creation across fields including healthcare. Additionally, multi-modal Al remains one of the most popular AI trends in business. It focuses on leveraging machine learning trained on multiple modalities, including speech, images, and traditional numerical data sets. As a result, there will be a more holistic and human-like cognitive experience.
Appinventiv opines that companies can capitalize on multi-modal Al and develop intelligent systems analyzing diverse data streams, which can help improve natural language understanding and voice recognition for better user experiences.
Our Methodology
To list the 10 AI Stocks That Will Skyrocket, we sifted through several online rankings and shortlisted the companies catering to the broader AI sector. Next, we chose the ones that analysts see significant upside to. Finally, the stocks are arranged in ascending order of their average upside potential, as of February 24. We also mentioned hedge fund sentiments around each stock, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An assembly line in a semiconductor factory, with workers at their stations.
Marvell Technology, Inc. (NASDAQ:MRVL)
Average Upside Potential: 40.5%
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) is a critical player in the broader AI industry as it designs custom silicon solutions, which include AI accelerators that are optimized for hyperscale data centers and cloud providers. Vivek Arya, an analyst from Bank of America Securities, reiterated a “Buy” rating on the company’s stock with the same target price of $150.00. The analyst’s rating was mainly backed by Marvell Technology, Inc. (NASDAQ:MRVL)’s advancements in AI technology and strategic partnerships. The analyst sees strong financial performance in the upcoming quarters, stemming from its healthy presence in AI optics and custom AI ASICs, mainly with well-established cloud service providers such as AWS, Google, and Microsoft.
Furthermore, the analyst lauded Marvell Technology, Inc. (NASDAQ:MRVL)’s strong pipeline and execution capabilities, which are aided by increasing cloud capital expenditures and a growing total addressable market for AI. The company has the potential to enhance its share of the AI accelerator market, with Arya projecting strong growth in both compute and optics segments. If Marvell Technology, Inc. (NASDAQ:MRVL) can enhance its market share in such areas, it can result in significant revenue gains over the upcoming few years, says the analyst.
Carillon Tower Advisers, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Marvell Technology, Inc. (NASDAQ:MRVL) is a leading provider of semiconductor chips for data centers. This past quarter, management highlighted very strong orders coming from customers in the artificial intelligence (AI) space as well as design wins for future AI-related chips. Management shared a long-term view for a revenue target that was above expectation.”
Overall MRVL ranks 5th on our list of the AI stocks that will skyrocket. While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.