Semiconductor designer Nvidia (NASDAQ:NVDA) has dominated the artificial intelligence (AI) stock trade since late 2022. ChatGPT’s success sparked a gold rush for Nvidia’s H100 graphics processing chip – a critical hardware piece for training advanced AI models. Investors poured billions into AI projects and software engineering teams scrambled for any Nvidia accelerator they could find. NVDA stock became a media darling, with its stock skyrocketing 700% by mid-June 2024. However, that’s changing now.
Apple (NASDAQ:AAPL) and Broadcom (NASDAQ:AVGO) are top AI stocks to watch during the remainder of this year. They could dominate the artificial intelligence growth stocks trade for the rest of this year.
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Is Nvidia stock losing its lustre?
Nvidia has reportedly encountered a design flaw that delays shipments for its latest and most advanced AI chips. Bloomberg estimates that shipments of Nvidia’s most advanced Blackwell series chips may be deferred into the first quarter of 2025. A three-month sales delay could result in significant potential revenue losses over the next quarter and reduce the company’s earnings growth rates for the rest of 2024. Investors don’t like such scenarios.
Nvidia’s most advanced AI chips may not be prominent revenue generators next quarter, hurting margins. NVDA stock tumbled in a 26% drawdown over the past month and is caught up in a broader market sell-off in August, which was triggered by rising interest rates in Japan and bearish economic indicators from the United States that paint a potentially gloomy economic outlook.
What could be the dominant AI stock going forward? Apple and Broadcom stock could steal the show from Nvidia during the remaining months of this year. Let’s see how.
Apple may dominate AI stock headlines
Apple’s Worldwide Development Conference (WWDC) in June potentially overhyped the consumer electronics stock. Apple portrayed its new ensemble of AI products, dubbed Apple Intelligence, as capable of leading a consumer AI revolution. Investors and consumers eagerly await to judge the new AI-enhanced iOS software packages beginning next month.
Why is Apple an AI stock to watch? Investors want Apple’s AI products to drive higher iPhone 16 sales upon its launch in September and help offset demand weaknesses in China. Apple Intelligence could start rolling out later next month, but major features, including ChatGPT integration, the Genmoji creator, and Siri app control may be bundled up in an iOS 18.1 update due October. There could be delays.
Some early reviewers feel the beta versions of Apple’s AI suite do not yet meet consumer expectations. Yet Apple’s WWDC presentations lifted its stock price in June.
The stage is for Apple to impress, or disappoint AI stock investors during the fourth quarter of 2024.
Further, legendary investor Warren Buffett’s halving of Berkshire Hathaway’s multi-billion stake in Apple stock recently may elevate market scrutiny on AAPL stock as investors re-assess the premium device maker’s revenue and earnings growth prospects during the remainder of the year.
Could Apple Intelligence bring back Apple’s glory in October? The final quarter of 2024 will show us the picture.
Broadcom: An AI stock to watch in 2024
Semiconductor giant Broadcom is an AI stock to closely follow right now. The company is attracting investor attention following its upbeat earnings announcement in June. Broadcom’s revenue lines received a significant boost from AI hyperscalers and custom AI chips. Potential deals with ChatGPT developer OpenAI or TikTok owner ByteDance could translate into competitive supplies of custom-made AI chips that steal market share from Nvidia and Advanced Micro Devices.
Broadcom is making headway in turning some Nvidia customers into partially self-reliant (or perhaps Broadcom-reliant) AI chip “consumers.” The company may help some heavy users of expensive AI accelerators to design and develop custom chips for their internal use and save them some billions. Broadcom’s specialized AI business could entice cloud companies like Amazon.com and many other big AI-chip buyers, and win billions in new revenue.
Broadcom recently reported a 280% surge in AI-related revenue to US$3.1 billion and guides for US$11 billion in AI-related sales for the Fiscal Year 2024. AI sales helped offset some cyclical weakness in legacy enterprise and telecom semiconductor business lines, and the company raised its annual networking segment revenue growth guidance in June from 35% to 40% as strength in AI continues.
The company’s earnings installment in September could show sustained AI revenue growth and generate interest in a weary market.
