2024 was quite a year for the market, with the S&P 500 index notching a 23% gain. The broader market rose by over 53% over the last two years. A big reason for this incredible gain is artificial intelligence (AI). However, many AI stocks now trade at tall valuations because investors only see an expanding market for AI and expect AI companies to grow earnings handily in 2025.
When evaluating stocks, investors always look at future earnings projections, which impact valuations. Stocks large enough and of interest to the broader investor community usually get covered by at least a handful of analysts who specialize in a sector and do their best to project future earnings. The average of these earnings projections is called consensus.
Here are two large chipmakers that Wall Street analysts think can increase their earnings by 178% and 140% year over year. Should you buy them?
1. Marvell Technology: 178% projected earnings growth
Marvell Technology (MRVL +7.11%) rode the AI hype to a 90% gain in 2024. According to estimates provided by Visible Alpha, analysts expect the company to post a loss of $1.08 in diluted earnings per share for its fiscal year 2025, which ends on Feb. 3, and then generate earnings of $0.84 in its fiscal year 2026 for 178% earnings growth. This growth may explain why at this writing Marvell trades at 71 times forward earnings.
NASDAQ: MRVL
Key Data Points
Marvell provides semiconductor infrastructures for data services including AI. The company targets data centers, enterprise networks, carrier infrastructure, consumers, and the auto industry.
Marvell generated about 40% of its revenue in fiscal 2024 from supplying infrastructure to data centers, which, as many know, is a key part of the AI food chain. Another 22% of revenue came from enterprise networking, and 19% from carrier infrastructure. The growth of AI is expected to lead to much more demand for data centers and associated computer infrastructure, which is why investors see a bright future for Marvell.
According to TipRanks, 28 analysts have issued research reports on the company in the last three months, and 26 rate Marvell as a buy. However, the average price target only implies 11.4% upside. Despite the company's strong potential and the growing market it operates in, I think investors can probably find better risk-reward propositions elsewhere.
2. Advanced Micro Devices: 140% projected earnings growth
Launched in 1969, Advanced Micro Devices (AMD +3.55%) is another AI stock Wall Street is bullish on this year. The company also builds key AI infrastructure including graphics processing units, accelerated processing units, and data processing units. Interestingly, AMD didn't have the same dream year as most of its peers, with its stock falling about 13% in 2024.
One issue AMD has is that it's a direct competitor of the AI chip king Nvidia. Nvidia's dominance can be seen in its reported market share of 80% in the AI processor market and 90% in the GPU market, according to Forbes. Nvidia's gross margin was nearly 75% in its fiscal third quarter of 2025, ended Oct. 27, 2024, while AMD's gross margin was 50% in its most recent quarter.
NASDAQ: AMD
Key Data Points
While AMD is unlikely to ever compete with Nvidia, simply being in the fast-growing AI market may eventually turn AMD into a winner. In recent months, experts have cautioned about a shortage of servers and AI accelerators, which could last for a few years and place great importance on any company that can provide this kind of infrastructure.
Some analysts are concerned that Advanced Micro Devices' AI revenue guidance is below investors' expectations. However, analysts still expect the company to grow earnings by 140% from a projected $1.41 diluted earnings per share in 2024 to $3.38 in 2025, according to Visible Alpha.
According to TipRanks, 31 analysts have issued a research report on AMD over the last three months, and 23 assigned the company a buy rating. The average price target suggests more than 50% upside. A positive surprise to earnings or guidance this year could get the stock moving, so it's worth a look.
