"AI-related [semiconductor] stocks led the [PHLX SemiconductorSector] in '23 and '24. We see '25 as more of the same as [chip scale package capital spending] continues to rise and enterprises work to monetize their AI strategies," said Oppenheimer analyst Rick Schafer.
GPUs and custom chips designed for AI workloads have generated significant growth under such demand, with Nvidia (NVDA) standing out as a leading force in the industry.
Schafer has named Nvidia and three other stocks as Oppenheimer's top stock picks for 2025.
Broadcom shares more than doubled last year.SOPA Images/Getty Images
Nvidia maintains its dominance
Nvidia is "the largest volume producer of AI accelerators and the cost-per-bit leader in AI training," Schafer said.
The company’s dominance comes from its full-stack approach to AI infrastructure, which includes a comprehensive portfolio of hardware and software ranging from AI graphics-processing units to networking components such as switches, NICs, InfiniBand, and NVLink, as well as its CUDA software platform.
A key driver of Nvidia’s growth in 2025 is its next-generation Blackwell architecture. "Demand continues to outpace supply," Schafer noted.
Oppenheimer estimates that Nvidia's data center AI-related sales in 2025 will reach $172 billion.
Meanwhile, Nvidia's competitors struggle to keep up. Oppenheimer anticipates AMD’s (AMD) AI sales at $7.5 billion for the year, falling short of buyside estimates of $9 billion to $10 billion.
Nvidia stock advanced more than 170% in 2024, making it one of the top performers in the Dow and the S&P 500.
Yet Oppenheimer said the stock was trading at a valuation below its historical multiples, which likely means a discounted trading price and further room for growth.
"Nvidia trades at 25 times our [calendar year 2026 estimated earnings per share] versus three- and five-year averages of 34 times and 37 times," Schafer added.
The investment firm has an outperform rating for Nvidia with a price target of $175. The stock closed 2.3% higher at $140.83 on Jan. 21. The target indicates potential upside of 24%.
Three other top picks: Monolithic, Broadcom, Marvell
Schafer also included Broadcom, Marvell and Monolithic Power Systems in the top-stock-pick list.
Monolithic Power Systems (MPWR) supplies 48V power systems to major AI players like Nvidia, AMD, Amazon, and Google.
Oppenheimer sees long-term growth as the market shifts to higher-power modules. However, major client Nvidia’s decision to reduce purchases from Monolithic for its Blackwell platform could bring short-term pressure to the power-tech provider. Sales to Nvidia are expected to fall by half this year to $200 million, the investment firm said.
Monolithic Power Systems shares eased 6.2% in 2024. They've tumbled 30% in the past three months even after the company posted strong Q3 earnings in October.
Monolithic closed at $638.49, up 2%, on Jan. 21. Oppenheimer has an outperform rating and a price target of $900 on the shares.
Broadcom and Marvell continue to shine in 2025
Broadcom and Marvell saw major gains in 2024, with shares surging 107.7% and 83.1%, respectively, driven by their strong roles in AI and data center markets.
Broadcom (AVGO) designs custom chips for tech giants like Google, Meta, ByteDance, OpenAI and Apple. In 2024, Broadcom's AI revenue exceeded $12 billion, tripling year-over-year.
"AVGO benefits as [cloud-service providers] scale AI clusters from hundreds of thousands to over 1 million connected [X processing units]," Schafer wrote. He also highlighted the company's profitability, "with 77% gross margin, 60% operating margin, and 38% free cash flow margin."
Marvell (MRVL) is the second-largest custom application-specific integrated circuit, or ASIC, provider, with key partners including Amazon, Google and Microsoft.
The company's data center sales in the recently reported October quarter nearly doubled year-over-year and moved up 25% sequentially, reaching $1.1 billion.
The company’s AI-related sales are expected to exceed $1.5 billion in the current fiscal year and $2.5 billion in 2025, CEO Matt Murphy said during the earnings call.
"We estimate custom ASIC revenue could approach $4 billion this year, roughly double buyside expectations," Schafer said.
Oppenheimer has an outperform rating on both Marvell and Broadcom, with target prices of $125 and $225, respectively.
On Jan. 21 Marvell closed off 0.8% at $123.78. Broadcom shares tacked on 1,2% to $240.31.
Oppenheimer's four stock picks for 2025 are the same selections the firm made for the previous year. Nvidia, Broadcom and Marvell were also big winners in 2024.
