The moment October started, AI chip stock recommendations began pouring in. Nvidia, Broadcom, and TSMC come up the most, and I'm sure plenty of people are wondering whether it's really a good time to buy.
Let me say this first. This post isn't recommending that you buy or sell.
It compares what Wall Street experts picked and why, and how prices moved after those picks came out, using numbers.
✦ Three questions, three short answers
The details come right after
All prices are closing prices from October 1 (US time) on US markets, in US dollars.
Price targets and ratings are individual analysts' opinions, so don't just trust them. Treat them as reference only.
To sum up the AI chip sector in October in one line: AI compute demand is exploding and Wall Street is optimistic, but some stocks have already climbed a lot since the picks came out.
So the gap between the time of the pick and now matters more than the pick list itself.
✦ Four numbers behind the AI chip boom
Demand and earnings first
| $89B | Nvidia data center revenue, up 117% year over year |
| $16.7B | Broadcom AI chip revenue, up 221% year over year |
| NT$514.8B | TSMC August revenue, up 53.3% year over year |
| $2.2T | AI compute market forecast for 2030, about 5x today (Piper Sandler) |
Why does everyone pick AI chips? On September 10, Piper Sandler analyst David O'Connor started covering the AI chip sector.
Their core argument is that AI is starving for compute. The hourly rental price of an Nvidia H100 GPU rose 30%, from $2.00 in December to $2.60 now, and 2027 production capacity is already sold out, with 2028 order books full too.
They forecast the compute market will grow to $2.2 trillion by 2030, about 5 times today's size.
Earnings back this up. Nvidia's second quarter (reported August 26) revenue was $96.2 billion, up 106% from a year earlier, and data center revenue was $89 billion, up 117%.
It guided third-quarter revenue to about $108 billion, and that figure includes not a single dollar of China data center compute revenue.
Broadcom's latest quarter (fiscal third quarter) revenue was $29.6 billion, up 86%, and AI semiconductor revenue was $16.7 billion, up 221%. It said fourth-quarter AI semiconductor revenue would grow to $21.7 billion.
TSMC's August revenue was NT$514.8 billion, up 53.3% from a year earlier, a record for the fourth month in a row, and monthly revenue topped NT$500 billion for the first time.
✦ Who picked what
Price targets in US dollars
So who did the experts pick? Piper Sandler named Nvidia and Broadcom its top picks. Nvidia, Broadcom, AMD, Arm, and Marvell get an Overweight rating, while Intel and Qualcomm are neutral.
The price targets are Nvidia 300, Broadcom 460, AMD 600, Arm 320, Marvell 270, Intel 110, and Qualcomm 190.
Bernstein's Stacy Rasgon raised his Nvidia target from 315 to 400 on August 27, and his Broadcom target from 550 to 575 on September 3. Both are Buy ratings.
Sajal Dogra of Rosenblatt Securities raised his Broadcom target from 500 to 600.
Bank of America's Vivek Arya named Nvidia the best-placed stock in his 2026 outlook, and put Broadcom, Lam Research, and KLA on his recommended list too.
Later he raised this year's semiconductor sales forecast to $1.3 trillion and called Nvidia, Broadcom, Marvell, and AMD leaders in AI compute.
Jefferies' Blayne Curtis raised his Broadcom target from 500 to 550 in June and keeps a Buy rating.
Keithen Drury, a contributor at the investing outlet The Motley Fool, picked Nvidia, Broadcom, and TSMC as the AI stocks to buy in October in an October 1 article.
That's one contributor's personal opinion, so keep it separate from analyst ratings.
✦ Wall Street's average target vs. the October 1 close
The yellow line is the October 1 close (100%); the teal bar is the average analyst target
Now let's compare the average price target across all Wall Street analysts with the October 1 close. Same date, same source.
Nvidia closed at 230.86 against an average target of 327.70, which means 41.95% of upside, as the numbers go.
Broadcom is 343.64 against 531.85 for 54.77%, TSMC is 459.20 against 552.26 for 20.27%, and Marvell is 268.08 against 290.97 for 8.54% of upside.
On the other hand, Arm is at 292.34 against 288.71, actually 1.24% below, AMD is 615.73 against 618.51 for 0.45% above, and Intel is 120.00 against 116.37, 3.03% below.
The numbers differ a little depending on who compiles them. For example, Nvidia shows up at roughly 324 to 328 and Broadcom at roughly 527 to 532.
✦ Piper Sandler's targets, recalculated with the October 1 close
Same targets, newer prices
Here's something worth noticing. When Piper Sandler started coverage in mid-September, the upside on its five stocks was presented as 19% to 37%.
But recalculate the same targets with the October 1 close and things change a lot. Nvidia is about 30%, Broadcom about 34%, and Arm about 9.5%.
Marvell has only about 0.7% left, and AMD's close is above its 600 target, so it's 2.6% below. Stocks that have already risen since the picks came out have that much less room left.
Let's go through them one by one. Nvidia is the stock the most experts picked. Data center revenue is up 117%, and Piper Sandler put Nvidia's share of the AI compute market at about 80%.
Just remember that China revenue is left out of the third-quarter outlook.
(Graphics card fans, you know this, right? Not long ago you could buy an RTX 5090 in Korea for around 4 million won, and now it's close to 10 million won... graphics card prices are rising faster than stocks.)
✦ Broadcom and Anthropic: the financing deal in four steps
The news cited around Broadcom's October 1 drop
| 1 | Broadcom lends Anthropic up to $42 billion |
| 2 | That's about one-third of Anthropic's $125.2 billion, five-year TPU commitment |
| 3 | Disclosed in Anthropic's IPO filing, as reported by Reuters and others |
| 4 | Broadcom shares fell 2.1% on October 1 to 343.64 |
Piper Sandler put Broadcom's share of the custom chip market for inference at about 75%, and Bernstein and Rosenblatt set targets as high as 575 and 600. But on October 1 the stock fell 2.1% and closed at 343.64.
Reuters and others reported that Anthropic's IPO filing revealed Broadcom would lend Anthropic up to $42 billion to lease chips.
That's about one-third of Anthropic's five-year, $125.2 billion TPU compute commitment.
Since Anthropic could become Broadcom's largest customer, some investors raised concerns about customer concentration and credit exposure.
TSMC keeps posting record monthly revenue, and Wall Street's average target is about 20% above its close.
September monthly revenue is due on October 8, and third-quarter earnings on October 15. Both dates are on TSMC's official schedule.
Marvell's Piper Sandler target is 270 and it closed at 268.08, so it has nearly reached the target already. On the other hand, it holds an investor day in New York on October 6, where it's expected to lay out its relationship with Google and its long-term outlook for custom chips.
That event could decide the stock's direction.
✦ The two big risers: AMD and Intel
October 1 close
| AMD Up about 190% this year Close 615.73 Piper: Overweight, target 600 Average target 618.51 +0.45% | Intel Up about 210% to 230% this year Close 120.00 Piper: Neutral, target 110 Average target 116.37 -3.03% |
Some voices urge caution after a surge. This year AMD is up about 190% and Intel about 210% to 230% (the figures vary a bit depending on the date each outlet counted).
Keithen Drury argued that both stocks' growth expectations are already priced in. AMD's 615.73 close is above Piper Sandler's 600 target, and only 0.45% separates it from Wall Street's average target.
For Intel, Piper Sandler has a neutral rating with a 110 target, and it closed at 120. If you were wondering "Should I buy AMD now?", by the experts' price targets, the numbers show there's almost no room left.
By the way, there are experts who argue the AI bubble could burst soon. If you're curious, check out the videos below.
These videos look at the market very pessimistically. If you hold a lot of AI stocks, or you're excited and itching to buy fast, videos like these can be a good reference.
You might get scared, thinking "Do I have to sell all my AI stocks all of a sudden?" But plenty of people say the exact opposite, so let's each make a wise judgment.
The Man Who Calls BS On AI: They're LYING About AI, 2027 Is When It All Breaks! (Ed Zitron)
Billionaire's WARNING: I'm SELLING. The Crash Is Already Here!
✦ Three dates to watch in October
US and Taiwan local dates
| Oct 6 | Marvell investor day (New York) |
| Oct 8 | TSMC September revenue (expected) |
| Oct 15 | TSMC Q3 earnings (TSMC official schedule) |
To sum up: experts mostly agree that AI compute demand keeps growing, and Nvidia, Broadcom, and TSMC were picked the most.
But stocks that have already risen since the picks have much less room left against their price targets.
From here, keep an eye on Marvell's investor day on October 6, TSMC's September revenue on October 8, and TSMC's Q3 earnings on October 15.
This isn't investment advice. You know that, right? Take care of your hard-earned money yourself.
Well then, shall we begin today's adventure?
No comments:
Post a Comment