We recently compiled a list of the 10 Most Promising AI Stocks According to Analysts.In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against the other promising AI stocks.
The General Outlook for Tech and AI is Positive
While 2024 has been a solid year for defensive stocks and utilities, the technology sector, on the other hand, experienced significant headwinds. However, the general outlook for technology and AI is starting to improve as we near the end of 2024. On October 9, Dominic Rizzo, T. Rowe Price portfolio manager, appeared in an interview on Yahoo Finance to discuss his thesis for the AI industry.
Most investors were disappointed after they failed to generate higher returns for their investments in AI during the second quarter of 2024. While Rizzo expects the theme to prevail for the next few quarters, he suggests that the technology and AI sector is on track to earn better returns, especially companies using artificial intelligence to improve their businesses.
As for the Magnificent Seven, while all companies have distinct business models and offerings, these companies have grown at a 50% to 100% faster rate than the rest of the market, making it reasonable to group them. Overall, Rizzo reiterates that while the group has been under immense pressure, it is well-positioned to leverage AI to its benefit.
Rizzo believes that AI is an innovation that is here to stay rather than a mere disruptive technology, meaning that companies using it to their benefit will most likely perform better than the ones that are not. Therefore, most if not companies have no other option but to direct investments in AI chips and GPUs. He expects the AI chip market to reach $400 billion by 2027.
Jamie Dimon is Not Worried about AI Taking Over Jobs
Technology has been altering the world since humans came into being. On October 8, Jamie Dimon, JPMorgan CEO appeared in an interview on Bloomberg Television where he discussed the role of artificial intelligence, initial public offerings, and the easing cycle by the Fed.
According to Dimon, technology was previously limited to certain regions and countries, but now we have tech centers in almost every part of the world including Berlin, Glasgow, and Edinburgh. According to Dimon, the acceleration in technology is great and he is glad that innovation is taking precedence, especially in Europe.
Speaking of AI, Dimon suggests that artificial intelligence is going to change a lot of things that are common elements of our world. As far as job losses go, technology has always been changing the job market and is mostly responsible for taking away jobs. However, he emphasizes the need to look at the bigger picture.
Overall, Dimon suggests that jobs will likely be more enhanced and researched-oriented. As for sectors like finance, people have been using it to detect fraud and minimize risk already. Similarly, AI has limited a lot of marketing jobs but at the same time, it has left a positive impact on productivity. Dimon shares he is not worried about AI changing the job landscape and that we should focus on re-training and re-educating workers losing their jobs as new technologies keep springing.
Now that we have studied the outlook of the AI industry, let's take a look at the most promising AI stocks to buy according to analysts.
Our Methodology
To come up with the most promising AI stocks according to analysts, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising AI stocks based on the Analyst upside as of October 9, 2024. We also included the hedge fund sentiment for each stock. It is to be noted, that we only considered stocks with a market capitalization of over $1 billion, as of October 9, 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An assembly line in a semiconductor factory, with workers at their stations.
Marvell Technology, Inc. (NASDAQ:MRVL) ranks eighth on our list of the most promising AI stocks to buy now. The company is based in California and engages in the development and production of semiconductors.
During the fiscal second quarter of 2025, the company's revenue grew by 10% sequentially, driven by its strong demand from the AI industry, and expects its data center market to accelerate significantly in the coming quarters. For the fiscal year ended 2024, the company generated over 10% of its revenue from AI-related chips, at $550 million, up from 3% in FY 2023.
Over the next five years, data center operators are expected to invest capital expenditure worth $2 trillion in AI infrastructure. This offers a huge opportunity to Marvell and believes it is well-equipped to meet the growing demand for AI compute infrastructure. In July, the company shipped its flagship ethernet switch chip for cloud data centers. The chip is capable of supporting inference, computing, training, and other workloads, positioning MRVL as an important stakeholder in the AI wave.
Last year, the company held a 10% market share of the data center market for accelerated custom compute, connectivity, and storage, a $21 billion industry. The company estimates that the industry will reach $78 billion by 2028 and aims to capture a larger chunk of the market.
Overall MRVL ranks 8th on our list of the most promising AI stocks according to analysts. While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about thecheapest AI stock.
