An analyst sees Semtech, ON Semiconductor, SiTime and Marvell Technology as major players in AI connectivity

Seaport analyst Jay Goldberg called Semtech, ON Semiconductor, SiTime and Marvell Technology the "four horsemen of AI."

Looking beyond the artificial-intelligence stocks that have become almost household names for investors, there are other ways to play the boom in computing hardware.

In a late Tuesday note, Seaport's Jay Goldberg initiated coverage on shares of Semtech (SMTC), ON Semiconductor (ON), SiTime (SITM) and Marvell Technology (MRVL), calling them the "four horsemen of AI." He currently recommends three of them but sees all four as satisfying the technology industry's appetite for AI infrastructure.

The line is a callback to the dot-com era, when Microsoft (MSFT), Intel (INTC), Cisco (CSCO) and Dell (DELL) became known as the four horsemen of the tech sector.

Semtech, a company that makes chips that help facilitate the networking connections between graphics processing units, is now well positioned to benefit from the booming demand for optical networking to connect GPUs in AI data centers, according to Goldberg.

The company has successfully "moved away from its troubled past in connectivity," he wrote, referring to its 2023 acquisition of wireless-communications company Sierra Wireless, which was "justifiably hated by [Wall] Street." He sees the opportunity in networking for data centers as much more lucrative than the company's previous focus on wireless connectivity.

As for ON Semiconductor, he noted that the company is capitalizing on improving demand for the chips specific to the industrial and automotive sectors. ON Semiconductor recently acquired Synaptics, which develops chip products as well as "physical AI" technology like touch displays for cars and smartphones. He's optimistic about the opportunity coming out of the deal and believes that the company's push into real-world AI will benefit profitability going forward.

Meanwhile, SiTime has made "tremendous progress" in "re-inventing the market for timing products," he wrote. Electronic devices need chips that process data in a synchronized way, and SiTime makes components that facilitate this.

Although Goldberg believes the company also has a major growth opportunity in the market for data centers, he said those prospects are largely already reflected in the stock price. The company will need more time to scale, he noted, and he launched coverage with a neutral rating on the stock.

Marvell is the best-known of the four companies. Goldberg believes it will see considerable growth going forward due to its custom-chip business and technology components that are essential for data-center connections.

"Marvell brings considerable [intellectual property] and expertise to the custom market and has all the tools to be a strong competitor," he wrote. That said, Broadcom (AVGO) and Credo (CRDO) are competitors that also make custom components.

Goldberg set a buy rating on shares of Marvell, Semtech and ON Semiconductor.

Shares of Semtech opened down 1.5% on Wednesday, and SiTime's stock opened down roughly 4%. Shares of ON Semiconductor and Marvell opened down less than 1%.

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-Hannah Pedone