As Nvidia (NASDAQ:)’s highly anticipated earnings report approaches, Northland Capital Markets has offered insights into the semiconductor landscape, particularly in relation to the AI trade.
While the firm remains cautious about the broader semiconductor sector due to potential volatility stemming from Nvidia’s guidance, they have identified six stocks that could present buying opportunities.
Northland Capital Markets believes Nvidia will likely surpass consensus expectations, driven by robust demand for its products.
However, the firm’s analysts express concern that the company’s guidance might not be strong enough to sustain its momentum.
“NVDA’s breakout quarter was a year ago, with revenues increasing by 88%,” they wrote. “Y/Y comps are becoming increasingly difficult moving forward.”
This caution stems from Nvidia’s ongoing product transition and rising competition in the AI space, which could impact its future performance.
Despite these concerns, Northland recommends looking for opportunities to buy certain semiconductor stocks that could benefit regardless of Nvidia’s short-term outlook. Specifically, they highlight AMBA, AIP, AMD (NASDAQ:), CEVA, PWR, and PDFS as attractive picks heading into Nvidia’s earnings report.
These companies are seen to be poised to benefit from various trends in the semiconductor and AI markets.
The report also underscores the competitive dynamics in the AI sector, particularly between Nvidia and AMD.
“AMD and NVDA are on different commercialization paths,” Northland notes, drawing a parallel to the historical rivalry between Microsoft (NASDAQ:) and Apple (NASDAQ:). They expect Nvidia’s market share in AI infrastructure to erode over time as alternatives gain traction.
While Nvidia’s earnings could introduce volatility, Northland Capital Markets sees potential in these six semiconductor stocks, making them attractive buys ahead of the report.