We recently compiled a list of the 20 Trending AI Stocks on Latest Analyst Ratings and News. In this article, we are going to take a look at where Marvell Technology, Inc. (NASDAQ:MRVL) stands against the other trending AI stocks.
Artificial intelligence (AI) stocks have taken a beating over the past few days, merely weeks after a broader market selloff in the technology sector that shook the entire finance industry. Shares of several prominent AI companies like have all witnessed high single digit drops in the space of just 24 hours. The NVIDIA selloff has wiped nearly $300 billion off the market value of the company. The growth-heavy NASDAQ Composite has registered a more than 3% drop in a single day of trading. AI valuations are bloated, no doubt, and the recent bear market has erased nearly $1 trillion in value from AI firms in just a few hours.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
The concerns around top AI chipmaker stem from recent reports that authorities in the US are growing uneasy about the near monopoly of the firm in terms of GPU provision. The stock’s outperformance in this regard has delighted investors – the chipmaker is doing business with tech giants like Google, Amazon, Microsoft, and Meta – but it has invited the ire of the Justice Department. The department is speculated to be in the process of sending a subpoena to the company, binding the business to provide certain information, in relation to an antitrust case. The purchase of Run:ai, an Israeli firm specializing in GPU orchestration software, back in April is believed to be one of the bones of contention between the AI chipmaker and the government.
Macro developments are also weighing on the AI stocks in the near term. Commodity markets around the world are absorbing less than impressive growth numbers from China, impacting prices of copper and rare earths. Copper and rare earth metals are extensively used in AI devices, from chips to batteries. Lates US manufacturing data also paints a not so good picture for factories. According to authorities, US manufacturing witnessed a further decline in new orders and rise in inventory during August, even as manufacturing overall contracted at a modest pace. In addition to these factors, new investment notes on AI from JPMorgan and BlackRock, questioning the ROI on ballooning AI capex, have also grabbed media headlines.
Read more about these developments by accessing Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
Our Methodology
For this article, we selected AI stocks based on latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An assembly line in a semiconductor factory, with workers at their stations.
Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 74
Marvell Technology, Inc. (NASDAQ:MRVL) makes and sells semiconductors. Latest reports indicate that Marvell is planning to buy Altera, the programmable chip unit of Intel, as the latter considers the possibility of selling it as part of a larger plan to cut costs amid mounting losses. Investment advisory Raymond James has noted that such a transaction could provide a modest benefit for Marvell. Srini Pajjuri, one of the analysts at the advisory, highlighted that from a strategic standpoint, a potential acquisition would help MRVL diversify into Industrial/Defense markets and beef up its already strong presence in Telco and Data Center markets. Pajjuri added that higher gross margins associated with FPGA products would also be attractive to MRVL, especially as Al custom silicon becomes a larger portion of its revenues.
Analysts at the advisory have, however, cautioned that such a deal involving Marvell Technology, Inc. (NASDAQ:MRVL) would likely require regulatory approval by China, which could prove problematic in the current geopolitical climate. The estimated market value of Altera is in the $18 billion to $22 billion range. Back in 2015, Intel had purchased Altera for around $16.5 billion. The chip unit had a revenue of nearly $3 billion in 2023.
Overall MRVL ranks 20th on our list of the trending AI stocks to buy. While we acknowledge the potential of MRVL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRVL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.