Citi's Top Specialty Chip Pick Shifts from Nvidia – Here's the New Leader

Citi's Top Specialty Chip Pick Shifts from Nvidia – Here's the New Leader

 Marvell Technology's stock (MRVL) got a boost on Friday as a Citi analyst named the chip maker their top choice in the specialty semiconductor sector.

In a research note, Citi analyst Atif Malik declared Marvell as his favorite specialty chip stock, moving Nvidia to the second spot. Malik maintained Buy ratings for both Marvell and Nvidia, setting price targets at $75 and $575 for their respective stocks.

Malik expressed optimism for Marvell's prospects in 2024, citing sustained growth in AI optics, the addition of custom ASIC AI project sales, and the recovery of non-cloud markets like enterprise networking and carrier. Despite Marvell posting lower fiscal third-quarter earnings and revenue compared to the previous year, Malik remains positive about the stock's setup.

On Friday, Marvell's stock rose by 1.8% to $69, while Nvidia's shares increased by 2.8% to $587.09.

Marvell's CEO, Matt Murphy, highlighted the company's diversified portfolio, noting strong growth in AI and cloud, which has helped offset softer demand in other end markets.

Analysts, recognizing Marvell's exposure to artificial intelligence, have been bullish about the company's future. Oppenheimer analyst Rick Schafer described Marvell as uniquely positioned in data-center AI, emphasizing its strengths in electro-optics, switching, storage, and custom ASIC chips. Schafer expects sales to accelerate in 2024 due to new product cycles and market share gains.

Meanwhile, despite Citi's shift in favor of Marvell, Nvidia remains a strong contender as the No. 2 specialty chip stock. Nvidia has already seen a gain of more than 15% in 2024.

Raymond James analyst Srini Pajjuri reiterated a Strong Buy rating for Nvidia, raising the price target from $600 to $700. Pajjuri believes that Nvidia's dominant position in Gen AI infrastructure is unlikely to face challenges in the near term. He anticipates robust growth driven by Nvidia's upcoming products, including the H200 and B100, later this year.

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