NVDA vs. AVGO vs. AMD: Which AI Stock Has the Most Upside? Top Analyst Weighs In

It has been an incredible year so far for the chip sector. The SOX has surged about 60% since late March and is now up 138% year-over-year, even after today’s 6% profit-taking tumble.

Most of those gains have been fueled by investor optimism surrounding a massive AI infrastructure boom driven by soaring spending from companies such as Microsoft, Amazon, Meta, and Google. What began as enthusiasm around Nvidia’s AI GPUs expanded into a broader rally once the market realized AI systems also require huge amounts of CPUs, memory, networking chips, storage, and advanced packaging. That realization lifted companies across the entire semiconductor supply chain.

Strong earnings, rising AI-related demand forecasts, shortages in areas such as high-bandwidth memory, and expectations that the industry is entering a long-term AI supercycle further added to the momentum. Investors also rotated money from software into hardware names viewed as direct beneficiaries of the AI buildout.

So, are we now in bubble territory? Not necessarily, says Bernstein’s Stacy Rasgon, an analyst who ranks amongst the top 1% on Wall Street.

Historically, rallies of this magnitude are often driven by rapidly expanding valuation multiples, since earnings growth typically struggles to keep pace with surging stock prices. “Not this time though,” Rasgon argued. While the SOX currently trades at around 28 times earnings, valuations still remain well below prior peak levels. Rasgon noted that the move has been driven overwhelmingly by massive upward earnings revisions, with earnings growth accounting for virtually all of the SOX index’s gains since the beginning of March.

The GPU/ASIC players such as Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) have been relative laggards, as investors have gravitated toward sectors and companies offering “more torque.” Even so, the widening performance gap between these groups is becoming increasingly notable, especially since the broader semiconductor subsectors are unlikely to sustain long-term strength without continued momentum from accelerator providers. As a result, Rasgon thinks there appears to be an opportunity for that divergence to narrow over time.

It’s no wonder, then, that Rasgon remains a fan of Nvidia and Broadcom, noting: “On ‘real’ numbers NVDA and AVGO both screen cheap (probably mid teens P/FE on realistic CY27 EPS) and continue to underpin AI demand.”

Accordingly, Rasgon rates NVDA as Outperform (i.e., Buy), while his $300 price target points toward one-year returns of 38%. (To watch Rasgon’s track record, click here)

For AVGO, Rasgon also assigns an Outperform rating, backed by a $525 price target, implying the stock has 12-month upside potential of 27%.

Additionally, Rasgon has “recently warmed” to AMD (NASDAQ:AMD) due to demand for CPUs as well as its broader opportunity in AI accelerators. The analyst has an Outperform rating here too, while his $525 price target suggests one-year share appreciation of ~21%.

So, between these 3 semi giants, this top analyst sees Nvidia as currently having the best upside.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.