Text size
Marvell Technology stock is up 65% so far this year.
Courtesy of Marvell
JP Morgan says two chip stocks will do well in the face of growing demand for custom-designed semiconductors:
Broadcom
And
Marvell Technology
.
On Thursday, analyst Harlan Sur told investors that the $14 billion high-end ASIC [application specific integrated circuits or specially made custom chips] market will grow by 20% per year in the future.
“Custom chip design activity has accelerated over the past few years and a good example is the aggressive adoption of generative AI which is accelerating demand for custom chip AI compute accelerators (ASICs) “, he wrote. “We believe that
Broadcom
And
Wonder
will be the biggest beneficiaries of this resurgence in custom chip design.
In Thursday’s trading, Broadcom (ticker: AVGO) stock was down 1.7% at $794.54 and Marvell Technology (MRVL) stock was up 3.7% at $60.65.
Generative AI has been a popular investing theme this year. The technology brutally ingests text, images, and videos to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
Sur estimates that Broadcom has more than 80 ASIC chip design deals, while Marvell has more than 40 design deals in its pipeline. He says Broadcom is the top player, accounting for 35% of the market, and Marvell is number 2 with 15% of the market.
Sur has an overweight rating on Marvell shares with a price target of $70. It currently has no rating on Broadcom; he dropped cover after news broke that JP Morgan is acting as a financial adviser to
vmware
(VMW) in connection with its sale to Broadcom.
Broadcom is expected to release its fiscal second quarter results after the market closes Thursday.
Email Tae Kim at tae.kim@barrons.com