Why Marvell just dethroned Nvidia as Citi's top chip-stock pick

By Emily Bary

Marvell's stock is also an artificial-intelligence play and stands to benefit from AI optics growth, analyst says

Move over, Nvidia Corp. A different chip name could be a bigger winner this year, according to a Citi analyst.

Citi's Atif Malik elevated Marvell Technology Inc.'s stock (MRVL) to his top specialty chip pick in a Friday morning note, bumping Nvidia's stock (NVDA) to the No. 2 position.

He cheered the 2024 setup for shares of Marvell, which sells compute, networking, storage and custom semiconductor offerings. The name is a play on the artificial-intelligence boom, according to Malik, who sees potential for shares to move higher amid growth in the AI optics market and the layering of custom application-specific integrated-circuit AI project sales.

Additionally, Marvell could see a trough for noncloud markets, including enterprise networking, he wrote.

See also: Super Micro's blowout numbers are latest bit of good news for chip industry

Marvell "sees overall enterprise networking demand being couple of quarters away from a recovery," Matik wrote in a previous note on the company earlier in January. "Speed upgrades remain long-term drivers, particularly in the U.S. where the economy which seems to be holding up better than other regions."

Matik has a buy rating on Marvell's stock, just as he does on shares of Nvidia. But he notes that Nvidia enjoyed a "20%+ stock run into CES," the giant technology trade show, ahead of which Malik had opened a 30-day positive catalyst watch.

Admittedly, both stocks have already enjoyed nice rallies to start 2024, with Marvell's stock up 15% on the year so far and Nvidia's ahead 17%.

Read: If Nvidia looked more like Salesforce, it might unlock billions more in cash, analyst says

"For any relative manager tracking a benchmark, not being overweight [Nvidia] (+15% YTD), [Advanced Micro Devices Inc.] (AMD) (10%), [Marvell] (13%) would be pretty hard to make up given [Nasdaq] COMP and [S&P 500] SPX are basically flat," Mizuho desk-based analyst Jordan Klein wrote in a note to clients Friday.

-Emily Bary

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01-19-24 1012ET

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