3 Semiconductor Stocks Poised to Surge on AI Spending

Globe and Mail

a day ago

It's been a roller coaster year for semiconductor stocks. Many of the biggest names, like NVIDIA Corp. (NASDAQ: NVDA), were on a tear heading into the year on plans for a massive data center buildout to support the needs of artificial intelligence (AI).
That hope turned to concern in January when China's DeepSeek large language model was released. This played into the bearish argument that hyperscalers (i.e., companies that require large-scale data centers to accommodate a wide range of cloud computing and data management services) would cut back on their infrastructure spending.
However, the first quarter earnings season disproved that assumption. If anything, companies such as Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT) are increasing their infrastructure spending.
Questions linger about the possibility of an infrastructure glut at some point in the future. But a market can't be oversupplied without the initial buildout. That's still taking place, and here are three semiconductor stocks that are well-positioned to grow significantly as revenue and earnings increase.
Breaking Through the Data Movement Bottleneck
Marvell Technology Inc. (NASDAQ: MRVL) makes application-specific integrated circuits (ASICs) that allow data to flow swiftly from one GPU to another. These ASICs are especially important in data center applications where the speed of data flow is paramount.
Marvell takes this one step further because it provides custom ASICs for companies like Amazon and Microsoft that make their own AI chips but still need to outsource certain elements. The company's business is not going to garner the headlines that NVIDIA or AMD generate. But its products are every bit as essential to the growing demand for AI infrastructure.
The company's data center contracts are important to stock price growth because it's a high-margin business. That's important as some lower margin aspects of the company's business are slowing down.
MRVL stock is up 23% since it released its first-quarter earnings report for fiscal year 2026 in late May. It's still trading approximately 30% below the consensus analysts' price target of $96.33.
Broadcom Is Paving the AI Infrastructure Highway
Broadcom Inc. (NASDAQ: AVGO) is another semiconductor-adjacent play related to AI and cloud infrastructure. In fact, Broadcom is less focused on the cloud sector, but it is essential to AI infrastructure. Broadcom provides the highways allowing companies like Marvell to move data in a data center configuration.
Specifically, Broadcom makes connectivity switches that allow GPUs to operate independently of one another. It also makes custom AI accelerators known as XPUs. These can outperform GPUs in some applications but should be thought of as complementary parts of an AI stack.
Like most technology stocks, AVGO stock dropped sharply in the first quarter of the year. However, the stock has made up for that loss and more. In fact, it's trading at an all-time high (ATH), and analysts still see more upside ahead.
What's particularly impressive about that is that the stock was at an all-time high before its earnings report, when it seemed priced for perfection. The stock dropped when the company's numbers were not as high as hoped, but it's since recovered and moved to a new high.
AMD Is Starting to Close the Gap With NVIDIA
In the initial data center buildout, NVIDIA has been the central focus for GPU developments, and rightfully so. Soon after launching its Hopper chip, the company also unveiled Blackwell. The company gobbled up market share and still has a commanding lead. But if investors are looking for a name that may close this gap its Advanced Micro Devices (NASDAQ: AMD).
While it's presumptuous to suggest this will be a tortoise versus hare situation. AMD's slow and steady approach to its GPU development appears to be taking shape. The company recently launched its Instinct MI325X accelerator, which has a memory capacity larger than that of the NVIDIA H100 chip and is well-suited for large-language models (LLMs).
This is an important release for AMD as it tries to capture NVIDIA's data center market share. Investors are taking notice, sending AMD stock more than 24% higher in the last 30 days. Analysts are also raising their price targets, which suggests more upside, particularly after the company's upcoming earnings in late July.
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