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3 Stocks To Buy That Are Riding On Nvidia's Coattails
Worried you've missed the boat on NVDA? Here are alternative options from Europe and the US that we like.
Surge in Nvidia share price following strong earnings helps to push stock to record gains.
Other US related stocks such as Marvell Technology gain further on their own positive growth outlooks.
From Europe, ASML and BESI are two picks that we feel offer good value versus US counterparts.
The story of the week that has dominated financial markets was the better-than-expected earnings from Nvidia on Wednesday, causing a large spike in the share price. This move saw it post a record market cap gain (shown below), with most of these gains being held onto as we write.
For those that feel it’s too late to jump on the NVDA train, here are three other related stocks that are waiting in the wings.
Marvell Technology (NASDAQ:MRVL)
As well as receiving a generous bump in the share price on Wednesday following the NVDA earnings, MRVL is moving higher again thanks to it’s own growth outlook was posted yesterday.
The CEO Matt Murphy commented that ‘we are forecasting our AI revenue in fiscal 2024 to at least double from prior year and to continue to grow rapidly in coming years’.
This is music to investors ears, with the stock up almost 10% this week, not including the 17% pre-market move we’ve seen overnight.
The chipmaker has it’s own USP’s, notably network connectivity products and emerging cloud optimised silicon platform. While we cna’t proclaim to understand this in granular detail, the promise of making big gains from AI sales is one that looks very achievable.
Although we can’t use a P/E ratio to compare value to peers due to Marvell posting a loss, the below chart shows that the stock price is attractive when looking at price-to-book, price-to-cash-flow and price-to-sales measures.
ASML Holding (NASDAQ:ASML)
The Dutch based manufacturer of semiconductor equipment saw it’s shares lift following the NVDA earnings.
There’s plenty of chatter that ASML can win big from the surge in demand in the broader AI boom. Chips are needed to power AI computing, and with a huge amount of infrastructure needed to be updated in order to be able to process the information, the equipment made by ASML should be hot property going forward.
Importantly, ASML is the only provider of ‘extreme ultraviolet lithography’ systems. This is noted as a key piece of equipment to make the high-end high-tech chips.
When looking at the share price chart, it’s clear to see why some feel more comfortable investing here than NVDA right now. The stock managed to break to fresh 52-week highs in the break above $700 this week (blue line). Yet there’s still plenty of room to run higher before reaching 2021 levels just under $900 (black line).
BE Semiconductor Industries (AEX:BESI)
BESI produces integrated semiconductor assembly equipment. It’s another company headquartered out of the Netherlands, and it listed on the stock market there. Yet with a market cap of over $8bn, it’s not a small cap stock that will suffer from any liquidity problems in trading.
The reason why we like this play as an alternative to NVDA is because it’s a good way to get exposure to the Europe AI surge. Of course, it has direct exposure to the US large caps, given that it supplies chip-packaging solutions to NVDA and AMD.
Yet the advantage of BESI to us is that it’s listed in Europe. We’re bullish Europe and have been since the start of the year. We feel that when you compare EU vs US equities, there’s a lot more relative value to be had when shopping for stocks in Europe. A good depiction of this is highlighted here:
As a result, we feel BESI shares are just one example of somewhere that could outperform going forward.
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