By Mackenzie Tatananni

The AI trade faces doubts about whether it can last another year, but artificial intelligence also has its share of believers on Wall Street.

One is Ben Reitzes, an analyst at Melius Research, who upgraded Marvell Technology and Intel to Buy from Hold and assigning price targets to both stocks. Marvell came in at $135, and Intel at $50.

The lasting power of AI for investors is anyone's guess, Reitzes wrote in a note Monday.

"Maybe it is something with regards to how quantum computing bursts on the scene in the 2030s, populist politics or China tensions," said the analyst, who spoke to Barron's in December about IBM's competitive positioning in quantum computing.

Reitzes conceded that AI skeptics have a few valid points, such as GPU depreciation schedules and circular investment deals; however, companies like Nvidia can maintain their top spots if they can "deliver AI productivity and usage soars."

And the analyst identified Marvell and Intel as other ways to play AI. In midday trading, Marvell was up 2.2% to $91.31. Intel inched up 0.6% to $39.60.

Nvidia and Broadcom remain the analyst's "top picks" in the industry, but Marvell is "in a good neighborhood," Reitzes said, citing its ties to Microsoft and Amazon.com.

Marvell's backlog in custom silicon is growing and revenue could double in 2027 because of the chip maker is a design partner and initial supplier for Microsoft's Maia chip. Reitzes projects Marvell could boost revenue by 20% this year, mainly through its partnership with Amazon; Marvell manufactures custom semiconductors for Amazon Web Services.

Reitzes believes Marvell is also shaping up to be a player in the "rapidly expanding scale-up market," pointing to its acquisition of data infrastructure company Celestial AI.

Intel is an interesting pick, considering the concerns about the company's beleaguered foundry business that proliferated at the start of last year. Many experts think Intel's foundry problems played a role in the December 2024 resignation of former CEO Pat Gelsinger.

But Melius is a fan of Intel's new chief executive, Lip-Bu Tan. And President Donald Trump and Jensen Huang like Tan "even more as a business partner." Last year, the U.S. took a stake in Intel and Nvidia bought $5 billion worth of shares.

There's a good chance Nvidia and Apple "take a hard look" at producing chips on Intel's 14A node by 2028 or 2029, Reitzes said, "and this news could fully filter into the stock as we go throughout 2026, driving higher book value."

Moreover, Intel's packaging assets are seeing increased demand given shortages, "which could buoy results a bit for the Foundry segment even in the near term."

Melius analysts are largely enthusiastic heading into this new year. The firm expects several catalysts, including clarity on OpenAI's revenue prospects and increasing adoption of AI agents.

Despite being unflaggingly optimistic, Reitzes identified a host of concerns about the data-center buildout, such as completion delays caused by labor constraints.

Data-center demand is also driving the price of memory chips sharply higher, and this cost is expected to transfer over to the buyers of smartphones and personal computers, though networking and servers should do just fine.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 05, 2026 12:48 ET (17:48 GMT)

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