Equities

More tech stocks set to benefit from Nvidia’s $24.65B revenue gain, analysts say

Nvidia's Q1 earnings surge 200%, boosting stocks like Super Micro (211%) and Taiwan Semiconductor (52%) in 2024.

By Alex P. Chase

5/23, 12:14 EDT
Analog Devices, Inc.
Dell Technologies Inc.
Microchip Technology Incorporated
Monolithic Power Systems, Inc.
Marvell Technology, Inc.
NVIDIA Corporation
NXP Semiconductors N.V.
ON Semiconductor Corporation
Taiwan Semiconductor Manufacturing Company Ltd.
Texas Instruments Incorporated
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Key Takeaway

  • Nvidia's Q1 earnings exceeded expectations with $5.59 EPS and $24.65 billion revenue, driving a tripling of its share price.
  • Beneficiaries include Super Micro Computer (+211% in 2024), Taiwan Semiconductor (+52%), and Dell (shares doubled).
  • Broader tech sector gains expected for companies like Astera Labs, Marvell Technology, NXP Semiconductors, and Texas Instruments due to AI demand.

Nvidia's Earnings Impact

Nvidia's recent fiscal first-quarter earnings report has had a notable impact on the tech sector, particularly for companies involved in artificial intelligence (AI). The company reported adjusted earnings per share (EPS) of $5.59 and revenue of $24.65 billion, both exceeding expectations. This strong performance was accompanied by a 10-for-1 stock split and an increase in its dividend, signaling robust growth and confidence in future prospects. Nvidia's revenue has surged by more than 200% in each of the past two quarters, driven by high demand for its AI processors from major tech companies like Google, Microsoft, Meta, Amazon, and OpenAI. The company's current generation of AI graphics processing units (GPUs), known as Hopper, are essential for developing advanced AI applications such as chatbots, translators, and image generators. This demand has led to a tripling of Nvidia's share price since its last fiscal first-quarter earnings report.

However, there are concerns about the sustainability of this growth. As Nvidia begins shipping its next-generation AI GPUs, called Blackwell, some customers may delay purchases, potentially causing a temporary dip in sales. Additionally, the high costs associated with running AI software, which requires Nvidia's GPUs, may pressure customers to demonstrate profitability from their investments.

Beneficiaries of Nvidia's Success

Several companies are poised to benefit from Nvidia's strong performance and the broader AI boom. Super Micro Computer, for instance, has seen its stock soar by more than 211% in 2024, following a 246% increase last year. Bank of America analyst Ruplu Bhattacharya highlighted the company's growth opportunities, noting that demand for AI-related accelerated computing is expanding beyond cloud service providers to consumer internet companies, enterprises, and sovereign AI entities. Bhattacharya believes Super Micro is well-positioned to capitalize on this growing demand. "In our view perhaps the biggest takeaway from Nvidia’s F1Q25 earnings call was that demand for AI related accelerated computing remains strong and is expanding beyond cloud service providers to consumer internet companies, enterprise and sovereign AI," Bhattacharya told clients. "In our opinion, Supermicro stands to benefit from this growing demand."

Taiwan Semiconductor is another beneficiary, as it supplies integrated circuits and packaging for Nvidia's AI processors. Bank of America analyst Brad Lin emphasized the company's role as an "enabler of generative AI" and noted that Nvidia's focus on energy efficiency could further strengthen Taiwan Semiconductor's position. "We are encouraged to learn the robust cloud AI outlook shared by Nvidia," Lin wrote to clients. Citigroup analyst Laura Chen also expects strong momentum for Taiwan Semiconductor, which has seen its U.S. shares jump 52% in 2024.

Dell, which has partnered with Nvidia to develop an AI factory, is likely to benefit as well. Citi analyst Asiya Merchant pointed out that Dell's diverse end markets and broadening customer base deploying AI infrastructure support a positive outlook for the company. "Overall we believe the diversity of end markets + broadening customer base that are deploying AI infrastructure support our positive view on DELL," Merchant said. Dell's share price has more than doubled in 2024, although analysts predict a potential pullback of over 7%.

Sector-Wide Implications

Nvidia's earnings report has broader implications for the tech sector, particularly for companies with high exposure to data centers and those focused on the intersection of AI and automotives. Stifel analyst Tore Svanberg identified Astera Labs, Credo Technology, Marvell Technology, MACOM Technology Solutions, and Monolithic Power Systems as likely winners due to their significant exposure to data centers. Maxlinear and Semtech are also expected to benefit, albeit to a lesser extent. On the automotive side, NXP Semiconductors, ON Semiconductor, Ambarella, and Texas Instruments are well-positioned to gain from the AI boom. Secondary beneficiaries in this space include Analog Devices, Monolithic Power Systems, and Microchip Technology.

Street Views

  • Ruplu Bhattacharya, Bank of America (Bullish on Super Micro Computer):

    "In our view perhaps the biggest takeaway from Nvidia’s F1Q25 earnings call was that demand for AI related accelerated computing remains strong and is expanding beyond cloud service providers to consumer internet companies, enterprise and sovereign AI... In our opinion, Supermicro stands to benefit from this growing demand."

  • Brad Lin, Bank of America (Bullish on Taiwan Semiconductor):

    "We are encouraged to learn the robust cloud AI outlook shared by Nvidia."

  • Laura Chen, Citigroup (Bullish on Taiwan Semiconductor):

    "[Expect] strong momentum to continue at Taiwan Semiconductor following Nvidia’s latest financial results."

  • Asiya Merchant, Citi (Bullish on Dell):

    "Overall we believe the diversity of end markets + broadening customer base that are deploying AI infrastructure support our positive view on DELL."

  • Tore Svanberg, Stifel (Neutral on data center-focused tech stocks and automotive-AI intersection stocks):

    "[Astera Labs, Credo Technology, Marvell Technology, Macom Technology Solutions and Monolithic Power Systems] as likely winners given their high exposure [to data centers]. Maxlinear and Semtech are probably secondary beneficiaries."

    "[NXP Semiconductors, ON Semiconductor, Ambarella and Texas Instruments] as stocks that benefit [from the intersection of AI and automotives]. Analog Devices, Monolithic Power Systems and Microchip Technology can be secondary winners."