Wolfe remains "broadly bullish on AI semis stocks", names Top Pick

Investing.com -- Wolfe Research told clients in a note on Thursday that greater clarity on financing arrangements and the scale of gigawatt shipments leaves it positive on artificial intelligence semiconductor stocks heading into earnings, with Nvidia (NASDAQ: NVDA) as its preferred name.

"We have left our estimates unchanged heading into earnings, as we are already above Street, and remain broadly bullish on AI semis stocks, with NVDA our top pick," analyst Chris Caso wrote.

The firm said the backdrop across the group remains very strong, with capital expenditure revisions and supply chain data points supporting continued spending growth.

They added that recent large financing deals from Nvidia and Broadcom (NASDAQ: AVGO) help explain how AI labs unable to access debt markets through conventional routes will fund the multi-gigawatt agreements signed over the past one to two years.

While Wolfe believes the decision by both companies to backstop those deals is not ideal, it argued the arrangements point to significant room for upside to its forecasts. The firm expects the catalyst for the group to be guidance for future years, since near-term results offer little insight into 2027 and 2028.

Wolfe favors Nvidia because disclosures so far have been the most limited, leaving scope for meaningful upside to consensus. On Marvell (NASDAQ: MRVL), it called the newly announced Google deal potentially transformational, with the warrant profile implying $120 billion of incremental revenue potential through fiscal 2033.

The firm said it is not counting on multiple expansion from current levels.

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