HomeBusiness2 Semiconductor Stocks to Buy and Hold for Great Long-Term Potential

2 Semiconductor Stocks to Buy and Hold for Great Long-Term Potential

The massive investments underway to transition traditional data center computing to accelerated computing for artificial intelligence (AI) are a major catalyst for leading chip stocks.

According to the researchers, applications that use generative AI can add trillions in value to the global economy JPMorgan. Here are two leading semiconductor companies providing the hardware to make this possible.

Nvidia

Nvidia (NASDAQ: NVDA) It’s estimated to have 80% of the AI ​​chip market, and that lucrative position gives the company huge profits to fund years of innovation. The company’s graphics processing units (GPUs) are used by OpenAI’s ChatGPT and all leading cloud services. Nvidia posted triple-digit revenue growth last year, with demand pointing to another strong year of growth in 2024.

The stock is up 78% since the start of the year, but that’s largely because investors are still catching up on the incredible growth the company is experiencing. Rising demand for its GPU systems helped Nvidia’s adjusted profits jump 286% last year to $32 billion.

In March, Nvidia unveiled the new Blackwell GPU-based platform with 208 billion transistors, which provides the computing power for generative AI requirements. Amazon, Tesla, MetaplatformsAnd Microsoft are among some of the companies expected to adopt Blackwell.

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Nvidia dominates the AI ​​chip market due to its past expertise in designing graphics processors used for playing video games. CEO Jensen Huang’s forward thinking led the company to adapt its GPU technology to various markets, including self-driving cars, robotics and supercomputers for AI. The adaptability makes Nvidia a solid buy-and-hold investment.

I wouldn’t underestimate the company’s ability to continue growing for years to come. Wall Street analysts have increased their growth forecasts and currently expect Nvidia’s revenues to grow 35% annually on an annual basis. With a price-earnings ratio (P/E) of 36, the stock still offers attractive long-term return potential.

Marvell technology

One name that is making many investors in the semiconductor industry more optimistic is: Marvell technology (NASDAQ: MRVL). The company’s products, including Ethernet adapters and storage solutions, help data centers move, store and process data. The stock is up 76% in the past year as its data center business experiences strong demand.

Marvell’s revenue grew just 1% last quarter, but data center revenue grew 54% year over year to a record $754 million, while AI revenue exceeded $200 million. According to Wall Street’s current estimate, the company’s total revenue will increase 42% to $8.4 billion over the next two years.

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The company expects near-term weakness in certain markets, such as consumer applications, wireless products and enterprise networking. But it sets the direction for the sequential growth of data centers next quarter. Management sees many opportunities in the field of AI and continues to invest in more growth.

These results show that Marvell will be a major beneficiary of the massive increase in data center infrastructure investment. Data centers are rapidly upgrading components to handle the large data flows that AI training requires. Specifically, Marvell’s AI-related revenues grew from 3% in fiscal 2023 to 10% in fiscal 2024.

The forward price-to-earnings ratio has risen to a premium of 49, but analysts expect Marvell’s long-term earnings growth to rise at an annualized rate of 26%. Like Nvidia, this is also a profitable company that generates growing free cash flow, making the stock a solid buy-and-hold investment.

Should You Invest $1,000 in Nvidia Now?

Consider the following before buying shares in Nvidia:

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has positions in Nvidia and Tesla. The Motley Fool holds positions in and recommends Amazon, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Marvell Technology and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.

2 Semiconductor Stocks to Buy and Hold for Big Long-Term Potential was originally published by The Motley Fool

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