Goldman Sachs (GS, Financial) thinks the AI frenzy has room for more than just Nvidia (NVDA, Financial) and spots two chip plays that could keep the momentum going.
Analyst James Schneider says we've already seen over $350 billion poured into AI infrastructure and we're finally getting some payoffs.
Instead of crowding back into Nvidia's stretched valuation, Schneider points to Cadence Design Systems (CDNS, Financial) and Broadcom (AVGO, Financial) as stocks with real upside.
Cadence delivered Q1 non‑GAAP EPS of $1.57, beating estimates by 7 cents, and revenue rose 23% to $1.24 billion.
Its $6.4 billion backlog shows customers are lining up for its AI‑powered design tools. Schneider calls Cadence “a high‑quality compounding business” thanks to its suite of AI and IP platforms.
Broadcom isn't hanging back. In fiscal Q2 it posted $15 billion in revenue, up 20%, and EPS of $1.58 beat forecasts by a penny.
AI accounted for $4.4 billion of that, a 46% jump. Schneider believes Broadcom's scale in data‑center switches and custom ASICs will push AI revenue past 40% by 2026, justifying its premium multiple.
