AI Chip Stocks Surge Premarket: What's Going On?

As the market opens today, AI chip stocks are surging in the premarket, with NVIDIA, Broadcom, AMD, Taiwan Semi, Micron, and Super Micro leading the charge. But what's driving this sudden interest in AI chip stocks? Let's dive into the data and expert insights to find out.

First, let's look at the financial outlooks and valuations of these AI chip stocks:

1. NVIDIA Corporation:
* Market Cap: $3.54 trillion
* Forward P/E: 32.61
* EPS Growth (Forward): 4.12
* Revenue Growth: 1.224
* Analyst Recommendation: Strong Buy (54 opinions)
2. Advanced Micro Devices (AMD):
* Market Cap: $1.09 trillion
* Forward P/E: 24.00
* EPS Growth (Forward): 54.00%
* Revenue Growth: Not explicitly stated, but expected to accelerate in 2025
* Analyst Recommendation: Strong Buy (54 opinions)
3. Marvell Technology:
* Market Cap: $45.5 billion
* Forward P/E: 27.00
* EPS Growth (Forward): Not explicitly stated, but expected to be driven by AI chip growth
* Revenue Growth: Not explicitly stated, but AI chip portfolio is booming
* Analyst Recommendation: Not explicitly stated, but the article suggests a "buy" recommendation

These AI chip stocks have strong financial outlooks and valuations, reflecting their innovative AI chip offerings and growing market presence. However, their earnings growth rates have slowed down compared to their historical averages and industry peers, indicating a more competitive landscape in the AI chip market.



Now, let's consider the key AI applications and markets these companies are targeting:

1. NVIDIA Corporation:
* Graphics and Compute & Networking segments
* AI-specific products like NVIDIA DRIVE, Jetson, and NVIDIA AI Enterprise
* Metaverse and 3D internet applications with Omniverse software
2. Broadcom Inc.:
* Semiconductor Solutions segment
* AI chip business with custom ASICs for cloud giants
* Custom ASICs for cloud giants to create more cost-effective AI solutions

NVIDIA is primarily targeting the GPU market, with a strong focus on AI-specific products and emerging markets like the metaverse. Broadcom, on the other hand, is focusing on the semiconductor market, with a growing AI chip business that caters to cloud giants looking to create custom ASICs for AI data centers.



In conclusion, the surge in AI chip stocks is driven by their strong financial outlooks and valuations, as well as their innovative AI chip offerings and growing market presence. However, the slowdown in earnings growth rates indicates a more competitive landscape in the AI chip market. As the market continues to evolve, investors should keep a close eye on these AI chip stocks to capitalize on their growth potential.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long NVDA, AMD, and AVGO.