Investing.com -- Wolfe Research has reiterated its bullish stance on artificial intelligence chip stocks ahead of earnings season, raising estimates on Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) while naming Nvidia its top pick despite the stock's recent underperformance against peers.

Analyst Chris Caso said cloud capital expenditure concerns that weighed on AI compute stocks earlier this year have largely faded following strong first-quarter earnings reports, with hyperscaler spending estimates continuing to rise.

Wolfe Research argued that the rise of agentic AI leaves the major cloud providers with little room to pull back, writing that "hyperscalers simply have no choice but to spend," as the alternative would mean sitting out one of the most significant technology shifts in recent memory.

Nvidia has lagged its AI compute peers over the past six weeks despite gaining roughly 28%, while Broadcom, Marvell Technology and Advanced Micro Devices posted stronger runs.

Wolfe Research attributed Nvidia's underperformance primarily to a lack of calendar-year 2027 revenue visibility, while competitors have provided clearer forward guidance.

The firm said Nvidia's $1 trillion disclosure at its GTC conference did not capture all opportunities, including new business yet to be booked and contributions from the Rubin pod architecture. Clearer 2027 guidance, Wolfe Research said, could allow Nvidia to close the gap.

Concerns around share losses to custom chips and margin pressure from memory pricing were acknowledged but not seen as fundamentally altering the outlook.

Wolfe Research reiterated Outperform ratings on Nvidia, Broadcom and Marvell, adding that " “NVDA remains our best idea. The stock's underperformance hasn't changed our fundamental view."