The landscape of artificial intelligence (AI) in the semiconductor industry is evolving, with Nvidia continuing its reign in the sector.
However, the lens is also shifting towards networking chip manufacturers, Marvell Technology and Broadcom, who are projected to reap benefits from the long-term demand for their Ethernet networking offerings. This is according to recent analysis by Bank of America.
The rising importance of networking semiconductors
An integral part of graphics processing units supporting many generative AI models, networking semiconductors have moved center-stage in the ongoing AI revolution.
The versatility of Ethernet technology, with its ability to cater to a broad spectrum of workloads from high-bandwidth requirements to extendibility, positions it uniquely in the AI landscape.
This observation was highlighted by Vivek Arya, a senior analyst at Bank of America, in a recent note.
Simultaneously, an escalating demand for rapid data transfer speeds is predicted to enhance the need for better bandwidth and networking infrastructure.
This scenario presents a lucrative opportunity in the optical interconnect space, a sector estimated to be worth $1.4 billion. In this domain, Marvell Technology already boasts an impressive market share of more than 75%.
Implications for chipmakers in AI expansion
Recognizing the positive environment for networking chipmakers, Arya has revised his price targets for Broadcom and Marvell.
His estimation for Broadcom shares has climbed from $950 to $1,050, a potential 24% increase from the previous week’s closing. Concurrently, Arya’s target for Marvell saw an increase from $70 to $75.
However, in the vibrant AI market, Arya still considers Nvidia as the leading contender. Nvidia’s dominance comes as no surprise, as it has witnessed a remarkable rise of over 195% this year alone, due in part to the increasing prominence of AI as an investment theme.
That said, Broadcom and Marvell are not far behind, recording their share of profits, with gains of about 50% and 59% respectively this year. As AI technologies permeate various sectors, these chipmakers are set to ride the wave of this advancing trend.
The unfolding story of AI is still being written, with various industries looking to harness its potential. It will be interesting to observe how these chipmakers navigate this dynamic landscape and shape the AI-driven world of tomorrow.
The stakes are high, and for now, all eyes are on these tech giants as they vie for the leading position in the rapidly evolving AI chip war.
