| | | CES focused on AI and accelerated compute. These companies are likely to benefit.
Jan. 11, 2025 8:00 AM ET
By: Chris Ciaccia, SA News Editor
 J Studios
The 2025 edition of CES had its usual announcements related to automobiles, robot vacuums and more. But like last year, the overriding theme was artificial intelligence and accelerated computing. And while everyone wants a piece of the AI pie, J.P. Morgan expects only a handful of companies, including Nvidia (NASDAQ: NVDA), to outperform based on product strength.
"In AI/accelerated compute, Nvidia continues to see a strong demand setup for CY25 as it brings to market its Blackwell platform (ramp is tracking in-line with expectations)," analysts at the firm wrote in a note. "Longer term, the team views AI/accelerated compute as a multi-year infrastructure build out as AI accelerators captures more share of the $1T data center infrastructure installed base."
Conversely, companies exposed to consumer facing markets — like smartphones and internet of things — are seeing demand "tracking in-line with expectations," while the automotive and industrial parts of the market are still mixed, the analysts added.
Marvell
Marvell Technology (NASDAQ: MRVL) executives believe the company's AI-related revenue is tracking "significantly ahead" of its previous expectations for $2.5B in 2025, with 2026 likely to grow as well, amid strong demand for optical and application specific integrated circuits.
Management also said the revenue target of $8B by 2028 for custom ASICs may now be "conservative," aiding other companies like Snyopsys ( SNPS) (chip/system design activity) and Lam Research ( LRCX) (leading-edge equipment tools). Marvell's custom ASIC business is driven by Amazon ( AMZN) and Google ( GOOG) ( GOOGL), but Microsoft ( MSFT) is likely to further fuel growth, the analysts added.
Additionally, Marvell has expanded into other areas, such as scale-up networking applications (in-rack connectivity), co-packaged optics, active electrical cables and linear pluggable optics, all of which could drive further growth.
Nvidia
Nvidia is likely to keep benefiting, as spending on AI and accelerated computing remain "strong" over the next decade and beyond, Nvidia CFO Colette Kress told J.P. Morgan's analysts.
Strong data center momentum should continue in 2025, amid the ramp up and demand for Nvidia's line of Blackwell GPUs, now in full production.
"In the longer term, the team expects significant revenue growth opportunities as it captures a larger percentage of the $1 trillion in datacenter infrastructure installed base," the analysts wrote. "This growth will be driven by a shift to accelerated computing and more demand for AI solutions."
Additionally, the analysts said Nvidia believes it has a "strong competitive advantage" against custom ASICs, due to its full software stack, comprehensive offerings, ecosystem and ease of adoption.
And while the company may not have said anything about its upcoming Rubin line of GPUs, it did launch several products geared towards the gaming product and a small supercomputer, Project Digits, geared towards AI projects.
"...[We] believe Nvidia is in a unique position to expand its installed base beyond high-end gaming and into the consumer market driven by proliferation of AI at the edge and its installed base of RTX PC platforms," J.P. Morgan analysts explained.
Skyworks Solutions
Skyworks Solutions ( SWKS) is expecting a normal, seasonal demand trend in its business.
"Overall, we believe the team is on track with the seasonal shipment profile for the December quarter as highlighted during the last earnings call," J.P. Morgan analysts wrote. "The team also believes that iPhone 16 demand trends are aligning with expectations. Looking ahead, we anticipate normal seasonality in the business for the March quarter (typically a 12-14% Q/Q decline) and the June quarter (flat to down Q/Q)."
Additionally, Apple ( AAPL) may launch an iPhone SE model early in 2025, which is expected to be "small" in volume and should not impact any seasonal trends, the analysts added. And with Apple focusing on an internal modem for the iPhone, Skyworks could see a return to its historical growth of around 10% content growth in radio frequency in the smartphone, J.P. Morgan analysts added.
There are also some "green shoots" in broad markets, except for industrial and infrastructure networking, the analysts added. And with Skyworks continuing to generate strong free cash flow, there is room to repurchase around $1B in stock annually, the analysts explained.
Micron
Micron Technology (NASDAQ: MU) expects to see a strong second-half of 2025 as AI is likely to keep driving the demand for high-bandwidth memory, the analysts said. Additionally, the non-AI part of Micron's business likely to see improvement in supply and demand, they added.
"The team struck an overall positive tone on data center demand with DRAM/NAND bit shipments expected to return to Q/Q growth in the May-Qtr on the back of strong AI-driven HBM/eSSD demand, overlaid with cyclical recovery in PC/smartphone segments as healthier customer inventory levels and increased adoption of edge AI devices drive renewed memory procurement given higher memory content requirements (we believe 40-60% higher memory content)," the analysts wrote.
They continued: "Furthermore, the team is seeing strong demand for its high capacity DRAM products (HBM, high capacity DIMMS and LP5x-based server DRAM) and remains confident that these products will generate multiple billions of dollars of revenue in FY25." |
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