Rosenblatt is calling out its favorite networking and semiconductor stocks as the “age of AI gold rush” kicks into high gear. The promise of artificial intelligence has captured Wall Street’s attention in 2023, requiring new technologies and innovations to meet the growing demand and heightened connectivity needs to power these models. That’s creating an attractive setup for what Rosenblatt views as the “picks and shovels” in the networking and semiconductor industries. “The number of Enterprises using AI and the enterprise use cases for AI are exploding,” the firm wrote in a Thursday report. “Most large enterprises want to train and run large AI applications in the Cloud, but only a small portion of existing Cloud infrastructure can support it.” AMD YTD mountain Shares since the start of 2023 It’s no surprise that Nvidia and Advanced Micro Devices rank among Rosenblatt’s top AI picks. Both companies have triumphed at the forefront of the trend due to their graphics processing used in large language models. Nvidia may reign as the chipmaker to beat, with shares up more than 190% this year, but AMD has also gained 62%. Beyond the pure-play semiconductor names tied to AI, Rosenblatt is placing its bets on Coherent . The firm sees the development of neural processors to handle greater workloads as integral to the company’s success, along with that of Qualcomm and Rambus . Analyst Mike Genovese views Coherent as one of the major beneficiaries of networking AI demand, representing about 40% of the multi-billion dollar Datacom module market. Coherent shares fell more than 24% this week after the lasers and optics maker issued weak revenue guidance for its fiscal first quarter and the full year. Rosenblatt this week upgraded shares to a buy from neutral rating, viewing the recent selloff as overdone. Ambarella is another beneficiary of the growing need for to handle sophisticated AI models, down about 17% this year. “We see [Ambarella’s] CVflow architecture as flexible enough to be a powerful low power inference stage generative AI Cloud processor or used as network edge hybrid generative AI processor,” analyst Kevin Cassidy wrote. — CNBC’s Michael Bloom contributed reporting
