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Superior Nvidia Grace CPU chip.
Marlena Sloss/Bloomberg
New Street Research says Wall Street analysts continue to underestimate the AI-related revenue prospects of three technology companies.
“In the past few months, expectations regarding the deployment of data center AI infrastructure in 2024 have almost doubled,” analyst Pierre Virago wrote Tuesday in a note to clients. Our overall conclusion is that the outlook for 2024 still has plenty of room to increase, particularly for
nvidia
And
But also for
from Broadcom
And
Arista
.
“
nvidia
(Ticker: NVDA) shares (Stock ticker: NVDA) rose 0.4% to $439.45 in early trading Tuesday, while
from Broadcom
(AVGO) shares fell 1.1% to $844.80.
Arista Networks
(ANET) shares rose 0.2 percent to $178.48.
Nvidia dominates the market for chips used for AI applications, so it will take advantage of generative AI, the software that ingests text, images, and videos to create content. Interest in this form of AI began with OpenAI’s release of ChatGPT late last year.
Virago says that while the current constraint on Nvidia’s revenue is an advanced chip packaging capability, called CoWoS, in
Taiwanese semiconductor industry
And
Semiconductor foundries are expected to double in the next year. If that happens, Nvidia could beat current projections for data center revenue for 2024 by more than 33%, according to Ferragu’s analysis.
The analyst is similarly optimistic about Broadcom’s ability to perform better than expected from the surge in AI demand over the next year. “Broadcom’s forecast also leaves meaningful room for further revisions,” he wrote.
He said revenue from the chipmaker’s semiconductor business could beat the current average forecast by more than 15% for fiscal 2024.
Virago is less confident about identifying the upside in Arista’s revenue, but believes the consensus outlook for network equipment manufacturers is “very low” as well, he said.
Write to Tae Kim at tae.kim@barrons.com
