Nvidia, AMD, and 3 More Chip Stocks to Buy for the Upturn, According to an Analyst -- Barrons.com

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By Tae Kim

Raymond James believes several semiconductor stocks are attractive buying opportunities to benefit from an industry turnaround.

In report on Wednesday, analyst Srini Pajjuri recommended shares of Nvidia (ticker: NVDA), Advanced Micro Devices (AMD), Intel (INTC), Marvell Technology (MRVL), and Qorvo (QRVO). The firm resumed coverage on these names with Strong Buy ratings on Nvidia and AMD; and Outperform ratings for Intel, Marvell, and Qorvo.

The analyst has a $290 price target for Nvidia and a target of $100 for AMD, while Intel's target is $30. For Marvell and Qorvo, his targets are $54 and $120, respectively.

Pajjuri said during the last three upturns, the semiconductor sector has outperformed the S&P 500 by 30% to 50% over a one- to two-year period. Investors should not be "overly cautious," he wrote. "Barring a steep recession, we expect upward [earnings] estimate revisions" in the second half of 2023 for chip makers, which sets their stocks up for more gains.

In midday trading Thursday, Nvidia stock rose 0.5% to $228.04; AMD shares fell 1.4% to $77.23; Intel stock was flat at $25.34. Shares of Marvell fell 0.4% to $45.20, while Qorvo stock dropped 1.1% to $99.38.

For Nvidia, the analyst says the chip maker is the "undisputed leader" in artificial intelligence applications. He believes the stock's valuation is justified, given the opportunity in machine-learning software. Pajjuri is also bullish on AMD as a beneficiary of the growing demand for AI chips.

Regarding Intel, the analyst says expectations for its business have come down far enough where the stock can start rising based on future profit margin improvement.

Finally, Qorvo should do well as 5G technology becomes more prevalent in cheaper smartphones and the market recovers in China as the Asian country reopens its economy, the analyst says.