Unleashing the AI Titans Part II: Three Companies Set to Reshape the Future

Captivating the world with endless potential, AI applications such as ChatGPT and Apple (AAPL)’s recently launched iVision Pro perhaps aren’t as revolutionary as some might think because, as I discussed in my last article, AI has already been playing a role in our everyday lives. Look back to the iPhone and the iMac, and you’ll notice that, in both cases, it was only the beginning of something bigger. What we consider a revolution today could be commonplace in… who knows how long? 

There is still time to expose our portfolios to winning AI stocks and hold them tightly. We see that the insatiable hunger for more probably won’t stop, so we should at least pay very close attention. 

For Part Two of our machine learning (or AI) list, I’m looking at three chipmakers that have performed incredibly well year-to-date, and Wall Street has applauded. Take a look with me: 

Marvell Technology Inc (MRVL) 

A leading provider of comprehensive data infrastructure and semiconductor solutions, Marvell Technology Inc. (MRVL) covers the entire data-network spectrum. MRVL’s expertise lies in developing and scaling complex “System-on-a-Chip” architectures that combine analog, mixed-signal, and digital signal processing capabilities. With a global presence spanning from the U.S. to Vietnam to Israel, MRVL was founded in 1995 in Wilmington, DE, where its headquarters remain. Stock-wise, MRVL is up YTD by 59.64% but, astonishingly, is still trading beneath its average price target; this leaves room for a possible price jump. MRVL shows TTM revenue of $5.8 billion, a positive 200-day SMA (simple moving average), and a D/E (debt to equity) of 30.16%. MRVL most recently surpassed analyst forecasts on EPS and revenue by 5.40% and 1.67%, respectively. MRVL has a 0.41% annual dividend yield and a quarterly payout of 6 cents ($0.24/yr) per share. With $1.74 billion in free cash flow and a 10-day average volume of 31.68 million shares, MRVL has a median price target of $65, with a high of $100 and a low of $50, representing an almost 70% price increase. MRVL has 28 buy ratings and three hold ratings

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Synopsys Inc (SNPS) 

Synopsys, Inc. (SNPS) provides semiconductor design and software testing products. SNPS’s offerings span Digital and Custom IC Design, FPGA design, and IP solutions for various applications. SNPS also offers system-on-chip infrastructure, prototyping, and optical system design tools. SNPS, established in 1986, is based in Mountain View, CA, and serves various industries. SNPS’s stock is up by 39.02% YTD, nearing the top of its 52-week range. With $5.28 billion in TTM revenue at $5.93 per share, SNPS profited $920.5 million on its 17.41% net margin. SNPS boasts an ROE (return on equity) of 16.16%, a PEG ratio of 2.49x, and a remarkably low D/E (debt to equity) of 0.35%. For its most recent earnings call, SNPS surprised analysts’ EPS and revenue projections by healthy margins and showed year-over-year revenue growth of 9.04%. SNPS is forecasted to deliver $1.5 billion in sales for the current quarter at an EPS of $2.73. With a 10-day average trading volume of 1.67 million shares, SNPS has a median price target of $447, with a high of $505 and a low of $410; this range still leaves room for a 14% price increase from its current position. SNPS has 15 buy ratings and two hold ratings

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Cadence Design Systems Inc (CDNS) 

Another leader in the semiconductor space is Cadence Design Systems, Inc. (CDNS), which provides software, hardware, and reusable integrated circuit (IC) design blocks. CDNS’s offerings encompass verification services with platforms like JasperGold, Xcelium, Palladium, and Protium. CDNS also offers digital IC design and analysis products for printed circuit boards and IC packages. CDNS serves diverse markets, including aerospace and defense, healthcare, mobile, consumer, and hyper-scale computing. CDNS has seen a massive boost thanks to the rise in machine learning, with its stock currently up YTD by 42.41%. CDNS has a TTM revenue of $3.68 billion at $3.12 per share, from which it made $855 million in net income via its 23.24% profit margin. CDNS boasts an ROE of 30%, a D/E (debt to equity) measure of 23.06%, and the firm most recently beat analysts’ earnings projections for EPS and revenue by 2.97% and 1.51%, respectively. With an operating free cash flow of $1.17 billion and a 10-day average volume of 3.28 million shares, CDNS’s median price target is $232.50, with a high of $250 and a low of $210, leaving room for an almost 10% leap from it currently sits. CDNS has 13 buy ratings and three hold ratings.

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