Missed Out on Nvidia? Buy This Magnificent Artificial Intelligence (AI) Stock Before It Soars at Least 43% in 2025.

By Investor Empires On Dec 7, 2024

Artificial intelligence (AI) has helped. Nvidia‘s (Nasdaq: NVDA) Stocks are posting stellar gains around the clock in 2024, with shares of the semiconductor giant up more than 183% as of this writing, but investors now appear to have doubts about the company’s ability to maintain its impressive growth rate over the long term.

Maybe this is why Nvidia shares fell Despite providing better-than-expected numbers and guidance last month. The company’s revenue for the third quarter of fiscal year 2025 increased a staggering 94% year-over-year to $35.1 billion, while earnings jumped 103% year-over-year to $0.81 per share.

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However, Nvidia’s revenue guidance of $37.5 billion for the current quarter suggests its top line is on track to increase at a relatively slower pace of 70% than the same quarter last year. Additionally, the margin pressure the company will face in the near term due to the introduction of Blackwell processors appears to have dented investor confidence.

Of course, Nvidia can overcome these challenges and provide more gains to investors. However, for those who missed the Nvidia rally and are looking for a relatively cheaper price Artificial Intelligence Stocks Ones that aren’t trading at a price 31 times as expensive might consider taking a closer look Marvell technology (NASDAQ: MRVL). Let’s look at the reasons.

Marvell Technology released its fiscal third quarter 2025 results (for the three months ended November 2) on December 3. The chipmaker’s total revenue increased 7% year over year to $1.52 billion, above consensus expectations of $1.46 billion. Its non-GAAP (adjusted) earnings rose to $0.43 per share from $0.41 per share in the year-ago period, again beating the consensus estimate of $0.41.

You might wonder why Marvell would be a good alternative to Nvidia given its slow pace of growth, but a closer look at the company’s data center business will reveal the real picture. The data center segment produced 73% of Marvell’s total production last quarter, compared to 39% in the same period last year. This segment’s revenue nearly doubled year-over-year to $1.1 billion, offsetting sharp declines the company saw in other segments such as Enterprise Networks, Carrier Infrastructure, Automotive/Industrial, and Consumer.

The good part is that the strength of Marvell’s data center business, which benefits from growing demand for custom AI processors and optical networking equipment, will be enough to lift the company’s growth higher in the current quarter. This is evident from Marvell’s fiscal fourth-quarter revenue guidance of $1.8 billion, which represents a 26% jump from the same period last year. Analysts had settled on revenue of $1.65 billion for Marvell for the current quarter.

Additionally, the chipmaker expects earnings to reach $0.59 per share in the current quarter, which translates to a 28% increase from the same period last year. Stronger-than-expected demand for its custom AI processors played a key role in its better-than-expected performance and strong guidance, Marvell CEO Matt Murphy noted on its latest earnings conference call.

Marvell’s management believes it will “significantly exceed our full-year AI revenue target of $1.5 billion.” The chipmaker expects AI chip sales to reach $2.5 billion in the next fiscal year, although analysts believe its AI-focused revenue could rise to $3 billion next year.

It’s easy to see why analysts expect continued strong growth in Marvell’s AI business. After all, the company is one of the main designers of custom chips, which are developed by major cloud computing providers to reduce their dependence on Nvidia by developing in-house chips. These cloud companies turn to the likes of Marvell, Broadcom To design their internal chips.

Reuters reports that the market for custom AI chips could be worth $45 billion by 2028, compared to an estimated $10 billion this year. Meanwhile, the company sees an additional $26 billion revenue opportunity in data center transformation and interconnection by 2028, thanks to artificial intelligence. So, it wouldn’t be surprising to see Marvel deliver much stronger revenue and profit growth in the next fiscal year and beyond.

Based on Marvell’s Q4 financial guidance, the company is on track to end fiscal 2025 with revenue of $5.75 billion. That would be just a 4% increase from fiscal 2024 levels. Its earnings are on track to reach $1.56 per share for the full year, an increase of 3% compared to the previous fiscal year.

However, analysts expect much stronger growth in fiscal year 2026 (which will start in February next year and coincide with 11 calendar months of 2025).

MRVL revenue estimates for the upcoming fiscal year Data by YCharts

The final forecast for fiscal year 2026 calls for a 31% increase, while the bottom line will rise by a staggering 63%. Of course, it wouldn’t be surprising to see analysts raise their estimates after Marvell’s latest quarterly report.

However, even if Marvell manages to generate $7.5 billion in sales next year and trades at 16 times sales at that time, its market cap could reach $120 billion. This would be an increase of 43% from current levels. However, the market has rewarded the likes of Nvidia with a much higher sales multiple of 31.

If something similar happens with Marvell and the company manages to achieve stronger growth in 2025, it may be able to post much stronger gains than expected above.

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Harsh Chauhan He has no position in any of the stocks mentioned. The Motley Fool has positions on and recommends Nvidia. The Motley Fool recommends Broadcom and Marvell technology. The Motley Fool has Disclosure policy.

Did you miss the opportunity to buy Nvidia? Buy this awesome Artificial Intelligence (AI) stock before it rises at least 43% in 2025. Originally published by The Motley Fool