AVGO, NVDA, or INTC: Which Chip Stock Is the Best Pick? – TipRanks.com

Major chip stocks have surged this year due to the boom in generative artificial intelligence (AI). Advanced chips are needed to develop and train artificial intelligence models. While Nvidia (Nasdaq: NVDA) is seen as the frontrunner in the AI ​​race, other chip companies are working on innovative products that can capture growth opportunities in the AI ​​market. We used the stock comparison tool TipRanks to place Broadcom (Nasdaq: AVGONvidia and Intel (Nasdaq: International) against each other to find the best chip stocks, according to Wall Street analysts.

Broadcom (NASDAQ:AVGO)

Shares of Broadcom are up 51% year to date as the company is expected to benefit from the artificial intelligence wave. However, the company’s guidance for 4QFY23 revenue growth of 4% disappointed investors, especially after Nvidia issued a market decline outlook.

In addition, a report by Information That tech giant Alphabet (Nasdaq: GOOGL, GOOG) is weighing on investor sentiment as Broadcom exits as an AI chip supplier as early as 2027. The report also states that Marvell Technology (Nasdaq: MRVL) can replace AVGO as one of Google’s artificial intelligence chip development partners.

Despite all the hype, Wall Street analysts are bullish on Broadcom, seeing it as the next big semiconductor play to benefit from AI-driven demand, trailing only Nvidia. The company expects generative AI to account for more than 25% of its semiconductor revenue in FY24, up from 10% in FY22.

What is AVGO’s price target?

Last month, Truist financial analyst William Stein reiterated a buy rating on AVGO stock and raised his price target to $995 from $942. The analyst noted that while the company’s traditional chip business is stabilizing, its AI revenue is accelerating, supporting a more stable and “growth” model.

With continued dividend growth, potential M&A benefits, and earnings growth that looks likely to be above the mid-single digits, Stein thinks there’s more room for fundamental changes in Broadcoms and the stock over time.

Broadcom shares earn a strong buy consensus rating with 16 buys and two holds. At $984.94, the average price target suggests a 16.5% upside.

Nvidia (NASDAQ:NVDA)

Shares of Nvidia are up 213% so far this year as the semiconductor giant sees increased demand for its graphics processing units (GPUs) from companies aggressively pursuing their generative artificial intelligence (AI) ambitions.

The company’s revenue rose 101% in the second quarter of FY24, while adjusted EPS rose 429%, driven primarily by a 171% increase in data center segment revenue. The data center segment includes the HGX platform, which is seeing strong demand from cloud service providers and consumer internet giants such as Amazon.Nasdaq: AMZN), alphabet, meta platforms (Nasdaq: Metaand Microsoft (Nasdaq: MSFT).

Looking ahead, the company expects its Q3 FY24 revenue to grow 170% as customers look to the company’s advanced GPUs to build and run AI applications.

Is Nvidia a good stock to buy?

On October 2, Goldman Sachs analyst Toshiya Hari added Nvidia to his dovish buy list. Hari considers this company to be the main provider of shovels in the artificial intelligence wave. Also, this analyst believes that NVDA will maintain its position as the industry standard for accelerated computing for the foreseeable future, given the competitive and urgent conditions in which customers are developing and deploying more sophisticated AI models.

Wall Street’s Strong Buy consensus rating on NVDA stock is based on 38 buys and one hold. The average target price of $647.07 indicates a 41.4% upside.

Intel (NASDAQ:INTC)

Intel shares are up 37 percent year-to-date as investors appreciate the company’s turnaround efforts. After two consecutive quarters of losses, the company returned to profitability in the second quarter despite continued top line weakness.

Continued weakness in the PC market has significantly impacted Intel’s earnings. Additionally, cloud companies and several others are more interested in securing GPUs for productive AI than Intel CPUs. Against a backdrop of tough demand, the company delivered improved earnings due to its cost-cutting efforts.

The company is undertaking several initiatives to turn around its business. Earlier this week, the company announced plans to spin off its Programmable Solutions Group (PSG) into a standalone business. The PSG unit, which makes programmable chips for defense, telecommunications and other end markets, will eventually be offered through an IPO. This move follows Mobileye (Nasdaq: MBLY) last year’s spin-off.

Is Intel a buy, sell or hold?

While several analysts cheered Intel’s PSG announcement, Barclays analyst Blaine Curtis is skeptical, reiterating the stock’s rating on Oct. 4. [Data Center and AI Group] “When times are good during the pandemic, and when business turns negative, it goes away,” Curtis said.

Curtis said he appreciates Intel’s turnaround efforts, but remains on the sidelines as he doubts the company’s ability to execute on its roadmap. In addition, he expects a reduction in estimates for the fourth quarter of 2023 and the first quarter of 2024.

Wall Streets’ consensus Hold rating on INTC stock is based on six Buys, 20 Holds and five Sells. The average price target of $36.53 suggests that the stock could be limited at current levels.

Result

Analysts are bullish on Nvidia and Broadcom, while bullish on Intel. Nvidia has outperformed Broadcom and Intel so far this year, and yet Wall Street expects NVDA stock to see the highest upside from current levels. The company’s advanced GPUs and innovative technology are expected to boost its continued performance.

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