Top 2 AI Growth Stocks to Invest in for the Long Haul

Top 2 AI Growth Stocks to Invest in for the Long Haul

Artificial intelligence (AI) has become the hottest investment theme, captivating the minds of seasoned investors and newbies alike. This is not surprising, given that several research firms expect the AI ​​market to be worth more than $1 trillion by 2030.

With the AI ​​trend having the potential to generate exceptional returns, investor interest in AI stocks is at an unprecedented level. Two actions, namely Nvidia (NASDAQ:NVDA) And Marvell Technology (NASDAQ:MRVL), can prove to be an interesting addition to any AI-focused stock portfolio. Here’s why these stocks are now smart choices.


Widely known as the poster child of the ongoing AI revolution, semiconductor giant Nvidia is making history before our eyes.

Nvidia reported impressive results for the fourth quarter of fiscal 2024 (ending January 28, 2024), with revenue and earnings beating consensus estimates. This is an impressive performance, especially since the US government’s growing restrictions on chip exports to China could force Nvidia to cancel billions of dollars in chip orders in 2024. Nvidia also faces a challenge competition from other chip players such as Advanced microsystems And Intelas well as its main customers who are developing their proprietary AI chips.

Despite this, the technological superiority of Nvidia’s AI chips has allowed it to capture nearly 92% of the global data center GPU market share. The company’s cutting-edge GPUs (A100 and H100 chips) and advanced networking technologies (which include InfiniBand solutions used in high-performance AI infrastructures and the recently launched Spectrum-X end-to-end Ethernet solution for optimized networks by AI) are widely used by data centers that are transitioning their trillion-dollar installed bases from general purpose computing to accelerated computing. Additionally, companies across industries are also leveraging generative AI technologies across all use cases, which can also represent a multi-billion dollar opportunity for Nvidia’s AI-optimized hardware offerings. Additionally, demand for Nvidia’s chips far exceeds supply, which has allowed the company to benefit from significant pricing power, a key factor in its strong sales centers. data over the last few quarters.

In addition to hardware, Nvidia’s Compute Unified Device Architecture (CUDA) programming software stack helps customers optimally program its GPUs for accelerated computing applications. With the increasing adoption of accelerated computing, businesses also need help maintaining complex software infrastructure. Since companies don’t have large engineering teams, Nvidia sees this as a big opportunity for its Nvidia AI Enterprise cloud-native software platform.

Although Nvidia’s growth potential may appear solid, investors are rightly concerned about its exorbitant valuation. Priced at 77 times earnings, Nvidia can be considered a very expensive stock. This valuation, however, remains cheaper than the company’s three-year average. price/earnings ratio (P/E) multiple of 95.9 and five-year average P/E multiple of 86.9. Thanks to its industry-leading offerings, Nvidia has always traded at a solid premium. Yet it has generated a staggering 300% return over the past year.

Therefore, given several robust tailwinds and a below-historical valuation, it makes sense to start accumulating a position in this stock. Investors can also opt for a periodic purchasing strategy and invest their money over a longer period, to control their risk.

2. Marvell Technology

Shares of fabless semiconductor player Marvell Technology fell nearly 11.4% in a single day after the company reported its latest results (Q4 FY2024 ending February 3, 2024) on March 7. Despite significant weaknesses in other end markets such as operator infrastructure. , enterprise networks and the consumer market, the AI-driven data center sector continues to be a bright spot.

Marvell has aggressively invested in AI-optimized networking products and chips to benefit from the explosive growth in the AI ​​and accelerated computing markets. The company has seen strong demand for its high-speed optical interconnect products (100 GB per lane and 800 GB PAM products used to move huge amounts of data between chips), accelerators and in-center switches. cloud data centers and AI-optimized data centers, in the fourth quarter. AI accounted for 10% of the company’s data center revenue in fiscal 2024. Marvell plans to deploy its even faster optical interconnect products (200 GB per lane 1.6T PAM solutions) by the end of 2024.

Marvell also recently announced the expansion of its long-standing partnership with Semiconductor manufacturing in Taiwan to develop a technological platform capable of producing 2 nanometer chips for accelerated computing. This agreement will enable the company to play a central role in improving the performance and energy efficiency of next-generation AI workloads.

Besides AI, there is also solid growth potential in Marvell’s other business segments. Although currently in a cyclical downturn, Marvell expects its carrier infrastructure, enterprise networks and consumer segments to gradually recover during the second half of fiscal 2025. The growing needs in connectivity and bandwidth in vehicles is also proving to be a major growth driver for the company’s automotive sector. business.

Given the growing demand for its AI-optimized networking products and the expected recovery in other end markets soon, starting a position in this stock could be a smart move in 2024.

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Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and Marvell Technology and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

2 Artificial Intelligence (AI) Growth Stocks to Buy and Hold Forever was originally published by The Motley Fool

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