The relentless pace of innovation in artificial intelligence is paving the way for sustained demand for AI chips, a Wall Street analyst says. And that bodes well for Nvidia stock and its peers.
Major cloud computing service providers aren't taking their foot off the gas for risk of falling behind in the AI computing paradigm shift, CFRA Research analyst Angelo Zino said in a client note Tuesday.
"Lack of monetization won't keep hyperscalers from investing in artificial intelligence," Zino said. "Rather, healthy cloud and digital ad spend should keep them spending."
He added, "The need for compute is likely to grow exponentially in the coming years and support greater AI monetization opportunities."
Nvidia Stock Among Top AI Picks
His top picks among AI chipmakers are Broadcom, Marvell Technology and Nvidia. He also likes the prospects for AMD and Qualcomm. However, he's telling investors to avoid Intel amid its operational struggles.
"Larger and smarter large language models (LLMs) will provide downside support/upside momentum for greater compute demand over the next three to five years," Zino said.
On the stock market today, Nvidia stock jumped 4% to 120.87. CFRA's Zino has a price target on Nvidia stock of 139.
Barron's reported Tuesday that Nvidia Chief Executive Jensen Huang has completed a trading plan that saw him sell 6 million shares from June 14 through Sept. 13. Huang remains the largest individual owner of Nvidia stock. He had a 3.8% stake in the company at the end of March, before his recent Nvidia stock sales.
AI Chipmakers On IBD Stock Lists
Elsewhere on the stock market, Broadcom stock climbed 1.1% to close at 174.84. Marvell fell 0.9% to 71.20.
AMD stock advanced 1% to 158.32. Qualcomm shares rose 0.6% to 166.95. Meanwhile, Intel stock increased 1.1% to 22.81.
The Philadelphia semiconductor index, known as SOX, rose 1.3% on Tuesday.
Nvidia stock is on three IBD lists: IBD 50, Leaderboard and SwingTrader.
Broadcom stock is on two IBD lists: Big Cap 20 and Tech Leaders.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
