3 Semiconductor Stocks Enjoy Boost Due To AI Demand: 'Outlook Remains Strong Through Next Year'

Zinger Key Points
  • Accelerated compute workloads drive demand for robust networking & optical infrastructure, benefiting key semiconductor players.
  • Broadcom, Marvell, and MACOM stand out in the sector, poised to capitalize on AI-driven networking demand growth.

In an era dominated by accelerated compute workloads, such as artificial intelligence (AI), the demand for robust networking and optical infrastructure has never been higher.

The OFC Networking conference in San Diego this week unveiled insights into the trajectory of this demand, setting the stage for significant growth in CY24 and CY25.

According to Harlan Sur, an analyst at JPMorgan, the landscape for semiconductor companies catering to networking and optical sectors presents promising opportunities.

“Bottom line, the AI-driven networking/optical demand outlook remains strong through next year,” Sur wrote in a research note.

Sur’s investment thesis highlights the pivotal role of three key players: Broadcom Inc AVGO, Marvell Technology Inc MRVL, and MACOM Technology Solutions Holdings Inc MTSI.

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  • Broadcom: Sur notes that Broadcom stands to benefit substantially from the expansion of high-performance networking required to support AI and accelerated compute workloads. With their AI networking revenues projected to increase significantly this year, Broadcom’s innovations in co-packaged optics (CPO) and next-gen switching chipsets position them at the forefront of the industry.
  • Marvell: Sur emphasizes Marvell’s dominance in PAM4 DSP chipsets, critical for enabling higher optical connectivity in data centers. Marvell’s collaborations with tech giants like Alphabet Inc GOOGL GOOG aka Google, Amazon.com Inc AMZN, Meta Platforms Inc META, and Microsoft Corp MSFT, underscore their pivotal role in driving the transition to advanced networking architectures. The impending 1.6T upgrade cycle further solidifies Marvell’s position as a key player in the semiconductor market.
  • MACOM: Sur highlights MACOM’s comprehensive portfolio of high-performance analog and photonic components, essential for supporting next-generation networking architectures. MACOM’s focus on innovation, particularly in linear drive pluggable optics (LPO) and copper transceiver architectures, positions them as a reliable partner for customers navigating the evolving connectivity landscape.

The outlook for AI-driven networking and optical demand remains robust, with Broadcom, Marvell, and MACOM poised to capitalize on the opportunities presented by this burgeoning market.

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