As semiconductor stocks face a significant selloff, investors are closely examining potential opportunities amid the market’s volatility. Harsh Kumar, a seasoned analyst at Piper Sandler, has highlighted Nvidia Corp. and Advanced Micro Devices Inc. (AMD) as two key stocks that stand out as attractive investment prospects despite the current downturn.
Nvidia Corp.
Nvidia, a leading player in the artificial intelligence (AI) sector, has experienced a notable decline in its stock price recently. This drop is part of a broader market rotation away from previously high-flying stocks and increased skepticism surrounding the future of AI technologies. Additionally, Nvidia has faced concerns about potential delays with its upcoming Blackwell chip lineup. These delays have raised questions about the company’s ability to meet its revenue targets.
However, Kumar sees this situation as a significant investment opportunity. He interprets Nvidia’s statements regarding the Blackwell chip delays as reassuring, suggesting that the impact on revenue may be less severe than initially feared. According to Kumar’s analysis, the potential revenue shortfall could be around $1 billion for the October quarter and between $2 billion and $3 billion for the January quarter. Despite these challenges, Kumar remains optimistic about Nvidia’s long-term prospects. He emphasizes that Nvidia maintains a dominant position in the AI accelerator market, with an estimated 80% market share projected by 2028. Kumar believes that the Blackwell architecture, set to debut in October, will continue to drive substantial revenue growth well into 2025, as the demand for Nvidia’s advanced AI products remains robust.
Advanced Micro Devices Inc. (AMD)
Kumar’s positive outlook extends to AMD, which has also emerged as a compelling investment choice in the current semiconductor market. While AMD stands to benefit indirectly from any delays in Nvidia’s Blackwell chip rollout, Kumar’s enthusiasm for AMD goes beyond this factor. He is particularly encouraged by AMD’s ability to capitalize on Intel Corp.’s current execution issues in the traditional server market.
At present, AMD holds a mid-30% share of the server market. Kumar is optimistic that AMD can significantly expand this share, potentially capturing more than 50% of the market by the end of the decade. This anticipated growth reflects AMD’s ongoing competitive edge and its ability to secure additional wins from key customers, which are often at the expense of Intel. Furthermore, Kumar forecasts that AMD could achieve a 20% share of the AI accelerator market by 2028, highlighting the company’s strong positioning for future growth.
Investment Advice
In light of the recent market downturn, Kumar advises investors to look past the short-term challenges and focus on the long-term strengths of Nvidia and AMD. Both companies have demonstrated exceptional product leadership and competitive positioning, which Kumar believes will enable them to thrive despite the current market conditions. His analysis underscores that, while the semiconductor sector faces volatility, Nvidia and AMD are well-positioned to navigate these challenges and capitalize on emerging opportunities in the AI and semiconductor markets.
Overall, Kumar’s recommendations reflect a strategic approach to investing in semiconductor stocks amidst a period of market correction. His insights suggest that Nvidia and AMD remain strong investment candidates due to their market leadership and potential for future growth, making them worthy of consideration for investors seeking opportunities in the current landscape.
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