Analyst Pierre Ferragu from New Street Research has identified three chip stocks that he believes have the potential to outperform this year. In his latest report, he reiterates his Buy ratings for Nvidia, Micron Technology, and Mobileye Global, stating that these companies are his top stock ideas for 2024. Ferragu has set stock price targets of $700 for Nvidia, $110 for Micron, and $50 for Mobileye.
According to Ferragu, Nvidia stands out with significant upside potential due to its existing ecosystem and large installed base. He emphasizes that the company has a structural advantage that comes from its robust programming platform, CUDA. Start-ups and corporations have been increasingly preferring Nvidia's products, thanks to CUDA's AI-related tools that make application development easier.
Micron, on the other hand, is predicted to see an increase in profit margins this year as customer inventories normalize. As a leading producer of both dynamic random-access memory and flash memory, Micron plays a vital role in computer technology and smartphone production.
Ferragu remains optimistic about Mobileye's long-term fundamentals, despite a recent decline in stock prices. The company faced challenges in the first quarter due to a 50% revenue decline caused by inventory build-up of its EyeQ computer chips with certain customers. However, Ferragu believes this setback is temporary and expects Mobileye to gain more market share with auto makers in the coming years by offering higher-priced solutions.
In related news, Mobileye recently announced that it secured a contract with a major Western auto maker, which further supports Ferragu's positive outlook for the company.
It is evident that these three chip stocks offer attractive opportunities for investors. With their unique strengths and potentials, Nvidia, Micron Technology, and Mobileye Global are positioned to deliver solid returns in the coming years.