Want an Nvidia alternative? These 6 chip suppliers look set to gain big from the AI boom

Published Thu, Feb 22 20246:43 PM ESTUpdated Mon, Feb 26 202412:21 PM EST

A number of stocks that supply Nvidia look set to gain from the AI boom, as the U.S. chip giant published another bumper quarter of earnings. Nvidia, which makes chips that are used to train artificial intelligence models, said sales had risen 265% year-on-year to more than $22 billion in its latest quarter . It reported a 769% jump in profits and raised its outlook for future growth. The acceleration in the AI trend also means that its suppliers' network stands to benefit directly or indirectly from the growth. CNBC screened for companies that are suppliers to the Silicon V a lley-headquartered firm and look set to gain from the AI growth story, according to LSEG data. These include semiconductor manufacturers like TSMC and Samsung Electronics , memory producer Micron Technology , and semiconductor equipment company BESI . Taiwan Semiconductor Manufacturing Company is the world's largest semiconductor foundry and makes high-tech chips for Nvidia that are used in data centers to run complex AI calculations. However, although TSMC is the sole supplier to Nvidia, the company's revenue sources are diversified; only 10% of its revenues come from making AI chips, according to FactSet data. TSMC also makes chips for companies such as Apple and AMD . Samsung Electronics and SK Hynix make "high bandwidth memory" chips used in the latest AI chips. SK Hynix is a "top pick" for Morgan Stanley. "Looking at the next 3-4 years, Hynix is significantly more exposed to NVDA, and HBM is becoming increasingly more strategic for GPU producers, and fits well in the search for names beyond NVDA," the Wall Street bank's analysts said in a note to clients on Feb. 18. Japanese firm Advantest makes equipment and materials used to test AI chips during manufacturing. The stock is also among the names linked to Nvidia that Morgan Stanley likes. On Thursday, Dutch chipmaking parts supplier BESI (or BE Semiconductor Industries) said it was witnessing growing demand for its "hybrid bonding" technology and AI-enabled computing applications from chipmakers expanding their capacity. BESI's technology helps connect the various parts of a chip efficiently. The company says clients including TSMC, Intel and Samsung are all adopting its advanced products. — CNBC's Michael Bloom contributed reporting. Correction: An earlier version of this story included Intel seven stocks in the table of Nvidia suppliers.