Cantor Fitzgerald analysts issued a bullish outlook for chip stocks, driven primarily by the continued expansion of artificial intelligence (AI) infrastructure. The firm anticipates sustained growth in AI spending from major cloud providers, governments, and enterprises.
This spending, they assert, is the key factor fueling growth in the semiconductor sector. Cantor highlighted several companies poised to benefit significantly from this trend.
Nvidia Corporation (NVDA) emerged as Cantor‘s top pick. The analysts cited the company’s ongoing development of its Blackwell AI platform as a catalyst for significant earnings growth. They project Nvidia‘s earnings per share could reach $8 next year, considerably exceeding current consensus estimates. This projection supports their $240 price target for Nvidia stock.
Other chipmakers expected to benefit from increased AI adoption include Taiwan Semiconductor Manufacturing Company Ltd. (TW:2330), Advanced Micro Devices Inc. (AMD), Broadcom Inc. (AVGO), and Micron Technology Inc. (MU).
Cantor acknowledged the current geopolitical uncertainty and economic challenges. However, the analysts view AI as a relatively stable sector within a volatile global landscape. They downplayed recent reports suggesting difficulties in integrating AI into businesses, emphasizing the continued strong return on capital for hyperscale cloud providers.
The analysts noted a substantial increase in capital expenditures by major tech companies like Microsoft Corp. (MSFT), Meta Platforms Inc. (META), Alphabet Inc. (GOOGL) (GOOG), and Amazon.com Inc. (AMZN), significantly exceeding prior forecasts.
Concerns surrounding potential restrictions on the sale of Nvidia‘s H20 chip to Chinese companies were dismissed by Cantor as short-term issues. The firm maintains its positive outlook, emphasizing the early stage of AI development and deployment.
Cantor also expressed optimism regarding AMD‘s data center graphics processing units (GPUs) ahead of the company’s November analyst day. The analysts believe that despite earlier concerns about pre-emptive purchases to avoid potential tariff increases, AMD‘s server and client CPU businesses have shown robust growth. They project AMD‘s earnings per share to approach $4 for the year.
While AMD‘s data-center revenue remains relatively small, the analysts are encouraged by the company’s expansion into rack-scale solutions and its potential to capture a significant share of the large-scale AI training market. The growing demand for AI inference further bolsters their positive outlook for AMD. The revocation of validated end-user status for certain companies, including Samsung Electronics Co. (KR:005930) and SK Hynix Inc. (KR:000660), was also noted but not deemed a significant long-term concern.
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