Yes, TD Cowen analyst Matthew Ramsay’s top chip stock pick for 2024 has seen a 220% gain so far this year, but he has a message to Wall Street: “No need to overthink this.”
That “best idea” selection, of course, is Nvidia Corp.
NVDA,
which has established itself as the backbone of the artificial-intelligence revolution this year. Companies are rushing to incorporate AI into their businesses following the mainstream popularity of ChatGPT, and Nvidia’s hardware is helping to make that possible.
As Ramsay titled his note to clients: “Just ’cause it’s obvious, doesn’t mean it’s wrong.”
“An accelerating product roadmap keeps Nvidia the far and away leader in the very early days of a massive paradigm shift to ubiquitous accelerated computing and generative AI,” Ramsay wrote. Nvidia, in his view, “is the leader in the most consequential growth vector of computing arguably ever (and certainly since the advent of the Internet).”
Nvidia’s data-center business has seen explosive growth this year, and Ramsay sees the potential for further expansion ahead. His take is that the company’s “suite of superior technologies, long pedigree of innovation, and extensive growth-oriented investments should continue to allow for strong, sustained, above-peer growth across a widening set of AI verticals.”
Read: Nvidia and Microsoft CEOs say industrial companies will benefit most from AI. Here are stocks to put on your watch list.
That’s likely to be “further invigorated by an accelerated product-introduction cadence, not to mention innovation across not only hardware but across all aspects of the AI workload — training, inference, and data processing,” he added.
Rival Advanced Micro Devices Inc.
AMD,
has a “highly competitive” MI300X product, but Ramsay thinks the total addressable market for AI hardware is “more than sufficiently large,” enough that two companies can win.
Investors don’t properly appreciate Nvidia’s ability to sustain demand through calendar 2025 and beyond, according to Ramsay. For one, he thinks generative AI spending “is more durable than many investors think.” Additionally, Nvidia’s move to sell full systems, beyond just chips, unlocks greater opportunities for the company.
Ramsay has an outperform rating and $700 target price on Nvidia shares.
See also: Nvidia’s stock is now this chip analyst’s top pick — knocking out AMD
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