Wall Street is sharpening its focus on AI, and two familiar chip giants are catching fresh attention from Goldman Sachs. The firms’ analyst James Schneider has initiated coverage on Nvidia (NVDA) and Broadcom (AVGO) with Buy ratings, setting price targets of $185 and $315, respectively. Both stocks are already up more than 20% year-to-date, and Schneider sees room for further upside, citing their positioning in the next phase of artificial intelligence investment.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
AI Spending Enters Next Phase
In a note to investors, Schneider emphasized his confidence in what he calls “performance and software ecosystem leaders” in the semiconductor space. NVDA stands out as the leading player in AI infrastructure, with Schneider highlighting its expanding customer base, product leadership, and pace of innovation. He also sees the valuation as attractive in light of the company’s long-term prospects.
For AVGO, the outlook centers on its dominance in custom silicon and the strength of its infrastructure software business. According to Schneider, AI is expected to contribute more than 40% of AVGO’s total revenue by 2026. He believes the company’s premium valuation is backed by consistent profitability and the stability provided by sole-source relationships with hyperscalers.
Last Word from Schneider
Schneider remains constructive on companies tied to AI-related capital expenditures, noting that while monetization has been uneven so far, there are early signs of revenue growth and cost reduction benefits. “We believe the AI investment cycle is in a state of transition,” he wrote, referencing the over $350 billion already spent on infrastructure buildout.