2 Artificial Intelligence (AI) Stocks to Buy as Demand for Custom Chips Soars

Here are five key points from the article:

Rising Demand for Custom AI Chips:
- There is a growing demand for custom AI chips, indicated by Amazon (NASDAQ: AMZN) exploring the sale of its Trainium line of ASICs.
Broadcom’s Success and Market Positioning:
- Broadcom (NASDAQ: AVGO) has developed custom AI chips for major hyperscalers such as Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), and OpenAI.
- The company’s AI chip business is booming, with significant year-over-year increases in revenue, earnings, and guidance.
Marvell Technology’s Growth:
- Marvell Technology (NASDAQ: MRVL) similarly develops custom AI chips for tech giants like Amazon and Microsoft (NASDAQ: MSFT).
- The company exhibits strong financial results, with revenue and adjusted earnings per share increasing substantially.
Expectations for Continued Growth:
- Both Broadcom and Marvell benefit from rising capital expenditure (capex) spending by hyperscalers, who are increasingly shifting to custom AI chips for cost-effectiveness.
- Alphabet’s projected significant increase in capex spending for 2027 highlights the anticipated growth in the AI chip market.
Investment Considerations:
- Broadcom’s stock has fallen despite strong business results, indicating investor concerns over market sentiment.
- While Broadcom and Marvell are poised to benefit from the AI chip trend, potential investors should look for other high-potential stocks recommended by The Motley Fool’s Stock Advisor for better returns.