The energy of the semiconductor market is off the charts as it has soared significantly in the last year, a 51% surge seen in the PHLX Semiconductor Sector index. This meteoric rise can be attributed to the insatiable demand for chips spurred by the rapid adoption of artificial intelligence (AI) applications.
The AI revolution heavily relies on semiconductors, with companies like Nvidia driving the charge with their AI-focused GPUs. Nvidia’s revenue and earnings sky-rocketed in response to the soaring sales of these GPUs, propelling the company’s stock price up an impressive 225% in the past year.
The tech markets may have heaped accolades on Nvidia for its exceptional performance, but the AI hardware realm is more diverse. Here’s an exploration of five other key players making waves in the AI hardware landscape.
AI Boom Fuels Server Manufacturers’ Success
While Nvidia, Intel, and Advanced Micro Devices create AI processors, the likes of Dell Technologies and Super Micro Computer build servers optimized for running AI workloads. Dell, boasting a 184% stock surge in the past year, aims for a return to growth in the current fiscal year after grappling with weak PC sales previously.
On the other hand, Super Micro Computer boasts phenomenal growth projections, with its fiscal year 2024 revenue expected to double to $14.5 billion from $7.1 billion in fiscal 2023. Analysts are raising their revenue estimates significantly, indicating a robust future for the company.
Memory Chips and Custom Designs in the AI Arena
Micron Technology triumphs in producing high-bandwidth memory (HBM) chips integral for AI processors like Nvidia’s GPUs. Micron experienced a 58% revenue surge last quarter and anticipates a further 76% growth in the current quarter. With analysts predicting a 57% revenue spike this year and another 42% in fiscal 2025, Micron remains a solid investment despite its 95% stock rise in the past year.
Broadcom is also riding the AI wave, with J.P. Morgan estimating its AI chip revenue to exceed $10 billion in the current fiscal year. The company recently secured new customers for its custom AI chips, pointing towards continued growth in this sector.
Broadcom’s foray into custom AI chips underscores a broader industry trend towards customized solutions among cloud giants to enhance efficiency and performance while cutting costs. Analysts predict that custom chips will form 30% of the $182 billion AI semiconductor market in 2027, hinting at a substantial uptick in Broadcom’s AI chip market to nearly $55 billion in the coming years.
Unveiling Jabil: The Unsung Hero of AI Hardware Manufacturing
The Rising Star
In a world where AI takes center stage, companies like Jabil (NYSE: JBL) often go unnoticed, quietly playing a crucial role in the supply chain of AI hardware. Despite a recent setback in its stock value after a significant surge, Jabil remains a hidden gem waiting to be unearthed by discerning investors.
The Backbone of AI
From the inception of design to the final assembly, Jabil’s products and services are the unsung heroes behind cost reduction and operational efficiency in the AI hardware industry. The company witnessed a significant uptick in AI-related orders, with management proudly announcing a 200x surge in AI GPU volume in the first half of 2024 compared to 2023.
Looking to the Future
Jabil projects a 20% boost in AI-related revenue for fiscal 2025, totaling a staggering $6 billion. This projection represents a solid 20% of the company’s overall revenue estimate of $30 billion for the same fiscal year. With a promising outlook, Jabil is poised to maintain its growth trajectory in the AI sector by expanding its market share across various segments of the AI data center infrastructure realm.
Investor’s Delight
Trading at a modest 0.5 times sales and 21 times trailing earnings, Jabil presents an attractive investment opportunity for those eyeing the AI market. As the company continues to forge ahead in the AI landscape, investors should consider seizing the opportunity before this AI maven revs up its growth engine even further.
Expert Opinion: Super Micro Computer
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John Mackey, former CEO of Whole Foods Market, JPMorgan Chase, and notable personalities in the tech industry are affiliated with companies mentioned in this report. It is imperative to note that the views expressed are purely the author’s and may not align with those of Nasdaq, Inc.
