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According to the firm, the world of computing has been rapidly advancing, but central processing units (CPUs) have struggled to keep up with the pace of Moore’s Law in recent years. As a result, there is an increasing need for greater computational capabilities provided by accelerators such as graphics processing units (GPUs), field-programmable gate arrays (FPGAs), and application-specific integrated circuits (ASICs).
According to CFRA, the long-term growth rate for accelerators is poised to grow at a rate of 20% over the next three to five years, compared to a much slower 3%-5% for server CPUs.
In the semiconductor space, CFRA identifies four major winners: Advanced Micro Devices, Inc. (AMD), Broadcom (AVGO), Marvell Technology (MRVL), and NVIDIA (NVDA), all of which have been given a buy or strong buy rating. While Intel (INTC) is expected to benefit as well, CFRA noted that its ability to execute and stabilize market share remains to be seen.
Generative AI has taken the world by storm in recent years, with ChatGPT being one of the most popular applications. Microsoft, a key investor in ChatGPT, has integrated a version of GPT into its Bing search engine, and Alphabet has unveiled its own conversational AI chatbot, Bard. As a result, CFRA expects to see more investments in software, enterprise, and cloud computing in the coming years.
As data centers continue to upgrade to allow enterprises to create AI-driven models, GPUs are set to be a major beneficiary. NVDA is currently the industry leader, with AMD and INTC also players in this space.
By Davit Kirakosyan
