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3 AI Chip Companies With Room to Grow



Key Points
Artificial intelligence (AI) will be a long-term catalyst for chip stocks. 
Nvidia is the top performer among AI-related chip stocks, but analysts believe there is still room for growth.
Qualcomm is expanding its presence in the AI space, despite being best known for providing chips for iPhones.
Teradyne is a major player in the chip testing market and is currently undervalued.
Investors looking to capitalize on the growth of AI should consider investing in semiconductor stocks. Semiconductor chips are crucial to various industries, including robotics, autonomous driving, and data analysis. The demand for processing power and speed, driven by AI applications, is expected to fuel the growth of the semiconductor industry for years to come. According to Grand View Research, the AI chip market could reach $134.64 billion by 2027, representing a compound annual growth rate (CAGR) of 5.9%.

Nvidia Corporation (NASDAQ: NVDA) is a standout performer in the chip industry. Despite a 219% increase in NVDA stock this year, analysts believe there is still potential for growth. Analysts on MarketBeat have raised their price targets for NVDA stock, indicating optimism in the company’s future prospects. While there are no guarantees, Nvidia is well-positioned in multiple sectors poised for AI-driven growth.

Qualcomm, Inc. (NASDAQ: QCOM), known for its role in the mobile device and 5G space, is also making headway in the AI field. While the company has faced challenges in its core business, it is expanding into AI-driven sectors like autonomous driving. Qualcomm has a favorable fundamental setup, including a forward P/E ratio of around 20x and expected earnings growth of approximately 19%. The consensus price target for QCOM stock suggests a modest lift of about 11%.

Teradyne, Inc. (NASDAQ: TER) is involved in semiconductor testing, a crucial step in ensuring the performance of end products. The company has experienced a correction cycle in semiconductor testing over the past year but is expected to see significant growth in areas such as automotive, cloud computing, and edge AI applications in the coming quarters. Despite beating earnings expectations and expected earnings growth of over 55%, the consensus estimate suggests a decline in the stock. However, two analysts have already raised their price targets for TER stock, indicating the potential for an upward revision in the consensus target.

Overall, investing in chip stocks that are heavily involved in the AI space presents an opportunity for long-term growth. Nvidia, Qualcomm, and Teradyne are all well-positioned to benefit from the continued expansion of AI applications in various industries.

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