Wall Street analysts are seeing substantial potential gains in artificial intelligence stocks Nvidia and Broadcom. Nvidia recently completed a 10-for-1 stock split in June, while Broadcom has a 10-for-1 stock split planned for July. Some savvy investors have been drawn to both companies, as history shows that a company’s stock price tends to rise around twice as fast as the S&P 500 Index during the year following a stock split announcement.
Beth Kendig from I/O Fund predicts that Nvidia could reach a market cap of $10 trillion by 2030, implying a 230% increase from its current market cap of $3 trillion. Joseph Moore from Morgan Stanley has set a bullish price target for Broadcom at $2,292 per share by June 2025, representing a 70% increase from its current price of $1,605 per share.
Nvidia is a market leader in data center GPUs and AI chips. The company’s GPUs are widely used for generating realistic computer graphics and accelerating complex workloads in data centers, especially for AI applications. Nvidia also offers additional data center hardware, software, and subscription services that support graphics and AI workflows. With over 95% of the market share in workstation GPUs and over 90% in data center GPUs, Nvidia holds a dominant position in the market. The company’s CUDA programming model gives it a competitive edge, enabling GPUs to accelerate various computing tasks in data centers. Nvidia’s recent financial results have been impressive, with revenue increasing by 262% to $26 billion and non-GAAP net income soaring by 461%.
Broadcom, on the other hand, is a market leader in ASICs and network chips. The company generates revenue from developing chips for wired and wireless networking, data center storage, and other markets, as well as infrastructure software. Broadcom holds a 35% market share in ASICs, positioning it well in the market alongside Nvidia. The company recently reported strong second-quarter financial results, with revenue increasing by 43% to $12.5 billion. Despite a current valuation of 69 times earnings, analysts view Broadcom as a critical component in the continued development of AI infrastructure.
While Wall Street expects both Nvidia and Broadcom to experience solid growth in the coming years, investors should consider the current valuations and potential risks associated with these investments. While Nvidia appears to have strong growth potential, investors should be prepared to pay a premium for the stock. On the other hand, Broadcom’s valuation may seem expensive at the moment, and it may be worth waiting for a more reasonable entry point to consider investing in the company. Personal opinions on the potential growth and performance of these stocks may vary, with some investors seeing substantial returns in the future.
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https://www.fool.com/investing/2024/07/01/2-stock-split-ai-stock-buy-before-soar-230-wall-st/