Nvidia: Chipmaker's Rise, Five Stocks to Watch

Nvidia, the leading chipmaker, has witnessed a remarkable surge in its stock price and market capitalization, driven by its dominance in artificial intelligence (AI) and gaming. The company's earnings reports have consistently beaten expectations, leading analysts to raise their price targets. As Nvidia continues to innovate and capture market share in AI chips, investors are eager to identify other stocks that could follow a similar trajectory. This article explores three breakouts among five stocks to watch, drawing insights from recent market trends and expert opinions.

Nvidia's gaming and data center segments both experienced impressive growth, with data center revenue reaching a quarterly record in Q3 2024. The company's earnings per share (EPS) and free cash flow (FCF) growth trends indicate a promising future, driven by its dominance in AI chips and gaming GPUs. Nvidia's significant R&D investment, totaling $2.1 billion in 2023, has led to a 57% increase in its patent portfolio since 2019, solidifying its competitive advantage in AI chip development.

Geopolitical tensions and export controls have impacted Nvidia's chip supply, particularly in China and Russia. However, the company's strong global demand for AI chips and strategic partnerships with foreign governments and companies have bolstered its supply chain resilience. Changes in government policies, such as subsidies and tariffs, have created market disparities, affecting Nvidia's competitiveness and profitability in different regions.



Three breakout stocks to watch include:

1. Supermicro (SMCI): Nvidia's earnings call mentioned Supermicro, a server manufacturer that utilizes Nvidia chips. SMCI shares surged 15% on Thursday, as investors anticipate potential benefits from Nvidia's strong results. As a key Nvidia partner, Supermicro could stand to gain from the chipmaker's ongoing success.
2. Dell (DELL): Another Nvidia partner, Dell, saw its shares gain close to 4% on Thursday. Citi analysts issued a "buy" rating and $160 price target for Dell, implying about 15% upside. The analysts expect Dell to benefit from an expanding market for artificial intelligence, particularly after Nvidia management highlighted "strong traction of AI in enterprise environments" in the company's earnings call.
3. Micron (MU): Providing Nvidia with memory solutions for its AI chips, Micron shares added more than 4% on Thursday. As Nvidia's AI chip demand continues to grow, Micron's role as a key supplier could translate into significant long-term growth opportunities.

Nvidia's dominance in AI chips and gaming GPUs has positioned the company for continued growth and investor interest. As the chipmaker continues to innovate and capture market share, investors should monitor its strategic partnerships and collaborations, as well as geopolitical dynamics that may impact its production and distribution. By focusing on Nvidia's breakout stocks and the broader market trends, investors can identify promising opportunities in the dynamic and fast-growing world of AI and gaming.