By Adam Clark

While Nvidia is the unquestioned leader in artificial-intelligence chips, it could be time to buy shares of its rivals Advanced Micro Devices and Broadcom for the next phase of the AI trade, according to Seaport Research Partners.

As Nvidia's customers start to seek greater return on investment on their AI spending, then the difficulties of deploying its most advanced systems could become a drawback, according to Seaport analyst Jay Goldberg.

Goldberg initiated coverage of Nvidia with a Sell rating and a $100 target price in a research note on Wednesday. Meanwhile, he gave Broadcom a Buy rating and a $230 target price and AMD a Buy rating and $100 target price.

Nvidia shares were down 2.3% at $106.51 in premarket trading. Broadcom stock fell 0.3% to $190.59 and AMD dropped 1.1% to $95.01.

"Nvidia is one of the leading beneficiaries of the current AI spending boom, but its prospects are well understood and largely priced into the stock," Goldberg wrote.

For Broadcom, the positives are directly related to its growing role in AI chips, helping major technology companies design their in-house processors. "Any time Nvidia loses share today it is to hyperscalers' internal chip designs, and Broadcom is poised to make a lot of money helping them bring those chips to production," Goldberg wrote.

The upside for AMD is less directly related to the AI sector. The company is unlikely to gain significant market share from Nvidia in the short term, but it is gradually building up a portfolio to match its larger rival, Goldberg said. It can continue to benefit by taking market share from Intel in data centers more generally, he wrote.

"AMD needs to be measured for its execution to roadmap and not its AI sales which we expect to be modest but growing over time," the analyst wrote.

Write to Adam Clark at adam.clark@barrons.com

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April 30, 2025 08:15 ET (12:15 GMT)

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