Nvidia (NASDAQ: NVDA) is now the largest company on the planet; its market cap represents around 7.5% of the value of the S&P 500. As such, if you own any mutual funds or exchange-traded funds (ETFs) — particularly index funds — you probably already have a lot of exposure to the giant chipmaker.
However, if you want to build a small portfolio of other chip stocks, you could do so by buying a basket that includes Broadcom (NASDAQ: AVGO), Marvell (NASDAQ: MRVL), Advanced Micro Devices (NASDAQ: AMD), and Arm Holdings (NASDAQ: ARM). Splitting an initial investment of around $4,000 fairly evenly, you could buy three shares of Broadcom, four shares of Marvell, two shares of AMD, and four shares of Arm. And if the AI infrastructure boom continues, by 2030, that semiconductor portfolio could be worth over $10,000. That’s about a 150% return. Here’s how.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Broadcom and Marvell
One of the biggest trends in AI infrastructure now is that hyperscalers (owners of large data centers) are choosing to designing custom parallel processors that are narrowly suited to their own computing needs. These application-specific integrated circuits (ASICs) — hardwired chips built for specific tasks — can lower costs and improve cloud computing and data center economics.
However, hyperscalers generally need the intellectual property and know-how of companies that specialize in this tech niche to turn their concepts into complete designs, and as such, they are increasingly turning to Broadcom and Marvell. Broadcom counts Alphabet, Anthropic, Meta Platforms, and OpenAI among its customers, while Amazon and Microsoft are Marvell’s custom chip customers. This is a huge and growing business for both companies.
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Analysts are forecasting that Broadcom’s adjusted earnings per share (EPS) will grow to $52.15 in its fiscal 2031 (which ends in October 2031). The S&P 500 currently has a forward P/E of around 19 times; if you apply that multiple to Broadcom’s fiscal 2031 consensus EPS estimate, the stock would trade at roughly $990 in late 2030. As such, your three-share investment would approximately triple in value to nearly $3,000.
Apply a similar multiple to the $40.93 consensus expectation for Marvell’s EPS in fiscal 2032 (which ends in January 2032), and that stock would trade at nearly $780 at the end of 2030. Your four shares would have more than tripled in price to be worth around $3,100.
AMD and Arm
AMD and Arm are plays on the expected rise of AI agents and the corresponding surge in demand for data center central processing units (CPUs). While servers dedicated to training AI only needed one CPU for every eight to 16 graphics processing units (GPUs), those that will power AI agents need equal numbers of CPUs and GPUs. AMD has said it sees the data center CPU market growing in size to $220 billion by 2030. AMD is a leader in this space, while Arm’s technology has long been used in advanced custom CPUs. However, given the size of the opportunity, Arm will also start making its own chips for the first time.
AMD also has a big opportunity in the AI inference space with its GPUs. It has large commitments from OpenAI, Meta Platforms, and Anthropic to buy those processors — deals that should also drive its growth in the coming years.
Analysts currently project AMD’s 2030 EPS will come in at $44.31. Assume another 20% growth in 2031, and that would bring its 2031 EPS target to $53.14. That’s a big jump from the $7.59 per share that analysts expect it to earn this year. Place a 19-times-forward-earnings multiple on the stock, and it would be worth $1,010 at the end of 2030. That’s nearly double the current stock price, and a two-share stake would be worth $2,020.
The current consensus for Arm’s fiscal 2032 (ending March 2032) adjusted EPS, meanwhile, is $11.98. The stock has always traded at a large premium due to its licensing and subscription model, although as it shifts to a hybrid model that also includes the sale of its own chips, that premium should come down. If we apply a 40-times forward P/E to the stock (down from over 100), it would trade at roughly $480. That’s more than a twofold increase, and four shares would be worth around $1,920.
Add it all up, and your $4,000 investment made today would be worth about $10,000 four years from now.
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Geoffrey Seiler has positions in Advanced Micro Devices, Alphabet, Amazon, Broadcom, and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Arm Holdings, Broadcom, Marvell Technology, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
