Nvidia Is Near Its High While Its Biggest Chip Peers Sit 18% to 32% Below Theirs. These Are the Chip Stocks to Buy.
Daniel Sparks, The Motley Fool
Sun, September 6, 2026 at 8:34 PM GMT+3 6 min read
Nvidia (NASDAQ:NVDA) closed Friday at $230.36, 2.6% below its 52-week high. Four of its biggest artificial intelligence (AI) chip peers ended the week nowhere near theirs. Advanced Micro Devices (NASDAQ:AMD) sits about 18% below its high, Micron Technology (NASDAQ:MU) about 19%, Broadcom (NASDAQ:AVGO) about 28%, and Marvell Technology (NASDAQ:MRVL) about 32%.
That spread is strange, because one wave of data center spending is paying all five companies. Nvidia expects capital spending by the five biggest hyperscalers (the biggest cloud and internet companies) to land near $800 billion this year and reach $1.3 trillion in 2027.
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Do the discounts rank the opportunities? I don't think they do.
Image source: Nvidia.
Nvidia's small discount is earned
Nothing in Nvidia's business has cracked. Revenue in the fiscal second quarter of 2027 (the period ended July 26) was $96.2 billion, up 106% year over year. Growth accelerated from the prior quarter's 85%.
Data center revenue was $89 billion, up 117%. And management guided the fiscal third quarter to $108 billion.
Nvidia's chief financial officer, Colette Kress, told analysts in late August to expect fiscal 2028 revenue growth of about 70% -- a figure that reflects what the company can manufacture, not what customers want.
Shares cost about 15 times analysts' fiscal 2028 earnings estimates. For growth like that, the price still looks reasonable to me.
The two deepest discounts just raised their outlooks
Broadcom reported its fiscal third quarter of 2026 (the period ended Aug. 2) on Wednesday. AI semiconductor revenue reached $16.7 billion, up 221% year over year and 54% from the prior quarter, and management expects $21.7 billion in the current quarter.
Even more, CEO Hock Tan told analysts he is looking to double AI revenue to $115 billion next fiscal year, and in fiscal 2028 to double it again, to $230 billion. Those targets lean on a short list of customers (OpenAI and Anthropic among them) deploying on schedule.
In other words, the group's fastest guided AI growth belongs to its second-deepest discount. Analysts' fiscal 2027 estimates put the stock at about 19 times earnings.
Marvell's discount is the deepest of the four. Its late-August report covered the fiscal second quarter of 2027 (the period ended Aug. 1). Revenue was a record $2.7 billion, up 37% year over year. Data center revenue (now 79% of the total) grew 46%. And CEO Matt Murphy said the company was again raising its revenue outlook for fiscal 2027 and fiscal 2028.
But shares fell about 10% the next day. Management's non-GAAP (adjusted) gross margin forecast implies giving up about a point as lower-margin custom AI chips take a bigger slice of sales. That is a cost-of-winning problem, not a demand problem. Even at a price-to-earnings multiple near 33 on next fiscal year's estimates, a point of gross margin seems like a fair trade for bookings management calls exceptionally robust.
What about AMD and Micron?
AMD's numbers are excellent, too. Revenue rose 50% year over year to $11.5 billion in the second quarter of 2026, and data center revenue more than doubled to $6.7 billion, or 58% of the total. But even 18% below its high, the stock costs about 31 times next year's estimated earnings. That price already counts on a smooth ramp of the company's new Instinct GPUs, just as memory (a big slice of an accelerator's cost) could get more expensive. I'll watch this one from the sidelines.
Micron sits on the other side of that memory bill. Revenue more than quadrupled year over year to $41.5 billion in its fiscal third quarter of 2026 (the period ended May 28), and management's forecast for the fiscal fourth quarter (results due Sept. 30) calls for about $50 billion, with a gross margin around 86%.
Yet Micron's price-to-earnings multiple sits at about 6.5 on next fiscal year's estimates. The market is treating profits like these as a cyclical peak. Memory has always cycled, so I think some of that caution is fair. I'd hold Micron here, without adding to it.
The discounts don't rank the buys
Ultimately, these discounts measure the market's patience, not the companies' earnings paths. Broadcom and Marvell carry the group's two deepest discounts. Both just raised their outlooks anyway.
That mismatch is where I'd put new money: I'd buy Broadcom and Marvell at these prices, and I'd still buy Nvidia near its high. Broadcom and Marvell are priced for problems (deployment schedules at one, a point of gross margin at the other) that look affordable next to the growth they just guided for.
Of course, chip demand moves in cycles, and every discount here could get deeper before it closes. I'd size each position with that in mind.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Marvell Technology, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
Nvidia Is Near Its High While Its Biggest Chip Peers Sit 18% to 32% Below Theirs. These Are the Chip Stocks to Buy. was originally published by The Motley Fool
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