AI Chip Stocks Beyond Nvidia: Goldman Sachs Highlights Cadence Design Systems and Other Names

Goldman Sachs analyst James Schneider recommends two AI chip stocks beyond Nvidia: Cadence Design Systems (CDNS) and a second unnamed name. Schneider believes the AI investment cycle is in transition, with early signs of incremental revenue and cost takeout. Cadence provides technology and support for industries like chip design, pharmaceuticals, and 5G systems, with a strong cloud portfolio and connections across the tech world. The company uses AI and AI-powered applications to support its work and develop product lines.

The AI boom has been generating significant hype and transforming various industries, from data crunching and decision-making to customer service and content generation. However, the hardware backbone of AI—silicon semiconductors—is equally crucial. While Nvidia remains the dominant player, Goldman Sachs analyst James Schneider recommends two other promising AI chip stocks: Cadence Design Systems (CDNS) and Broadcom, Inc. (AVGO).

Cadence Design Systems (CDNS)

Based in San Jose, California, Cadence Design Systems provides technology and support for critical industries, including chip design, pharmaceuticals, and 5G systems. The company's Intelligent Design System and extensive cloud portfolio make it a key player in the tech world. Cadence's solutions, such as 3D-IC design, 5G systems, and AI and generative AI, are in high demand across various sectors, including aerospace and life sciences.

Cadence leverages AI and AI-powered applications to support its work and develop its product lines. Its generative AI platform has the potential to revolutionize semiconductor chip design. The company's AI IP platform offers comprehensive solutions in the worlds of IP and software.

In the first quarter of 2025, Cadence reported a non-GAAP EPS of $1.57, up 40 cents per share from the previous year, and revenue of $1.24 billion, a 23% year-over-year increase. Schneider rates CDNS as a Buy, with a $380 price target, suggesting a one-year upside potential of 19.5%. The stock has a Strong Buy consensus rating from the Street's analysts [1].

Broadcom, Inc. (AVGO)

Broadcom, with a market cap of $1.30 trillion, is a global leader in the chip industry, known for its wide range of products and services, including AI-capable chips and application-specific integrated circuits (ASICs). These ASICs are custom-made to the buyer's specifications, making them more efficient in terms of power consumption and processing speed. They are vital in AI, cloud, and data center applications.

Broadcom's current strengths include its leadership in enterprise networking silicon and its reputation for high-quality, high-speed networking. The company is also working on the next generation of AI-capable technologies, such as custom accelerators, that will revolutionize the AI industry.

In the second quarter of 2025, Broadcom generated $15 billion in total revenue, up 20% from the previous year, and reported earnings of $1.58 per share. Schneider rates AVGO as a Buy, with a $315 price target, suggesting a one-year gain of 12% [1].

Conclusion

Both Cadence Design Systems and Broadcom, Inc. offer promising opportunities for investors seeking exposure to the AI chip market beyond Nvidia. Schneider's analysis highlights the potential for long-term growth driven by the increasing demand for custom chip design and AI infrastructure. As the AI investment cycle transitions, these companies are well-positioned to benefit from early signs of incremental revenue and cost takeout.

References

[1] https://www.tipranks.com/news/article/looking-for-ai-chip-stocks-beyond-nvidia-goldman-sachs-says-these-2-names-deserve-a-look
[2] https://finance.yahoo.com/news/cadence-design-systems-nasdaqgs-cdns-171916437.html