The incredible market run of American chipmaker Nvidia, being seen as the face of the artificial intelligence boom has also captured the imagination of Indian investors and market experts.
Nvidia became the world’s most valuable company after its share price climbed to an all-time high on Tuesday taking its market capitalisation to $3.34 trillion, making it more valuable than fellow tech giant Microsoft after it had already overtaken Apple earlier this month.
However, by Friday, it had slipped back to the third place and by Monday morning, its stock had fallen more than 5% to about $120.
Even as some experts debate whether Nvidia’s stock performance is the result of a bubble, analysts across various regions, including India, are drawing parallels between Nvidia and other stocks that might follow a similar trajectory.
These analysts suggest that companies linked to Nvidia’s production or business model could benefit from its rise.
Invezz, based on advice from market researchers, has zeroed in on 3 Indian stocks whose names are being taken in the same breath as the Jensen Huang led company.
1. MosChip Technologies
Artificial Intelligence (AI) and semiconductors have forged a symbiotic relationship, each driving the other’s growth and evolution.
The unprecedented computational demands of AI have fueled the development of more powerful and specialized semiconductor technologies, while advances in semiconductor manufacturing have enabled the creation of increasingly sophisticated AI systems.
According to a report by McKinsey and Company, AI and machine learning has the potential to generate huge business value for semiconductor companies at every step of their operations, from research and chip design to production through sales.
AI could generate $85 billion to $95 billion for semiconductor companies over the long term, the report said.
Consequently, semiconductor industry stocks have been some of the biggest beneficiaries of the AI boom.
Enter MosChip Technologies, a semiconductor and system design services company headquartered in Hyderabad, India, designing semiconductor products and SoCs for computing, networking, and consumer applications.
Between March 26 and June 24, the share price of the company has seen a rise of a staggering 238.2%, while in the last one month itself, the price has increased by 124.8%.
According to MC Govardhana Rangan, senior editor and veteran financial markets journalist with the Economic Times, as investors search for the next Nvidia, Moschip Technologies has gained attention for its high market capitalisation.
Its market cap currently stands at Rs 5,830 crore.
The company has also recently secured a Rs 509.37 crore contract from the Centre for Development of Advanced Computing (CDAC).
This contract involves the development of a high-performance computing (HPC) SoC (System on a Chip) using 5nm (nanometer) technology, a step that is expected to open significant domestic and international market opportunities.
In fact, after the company secured the contract, its share price was locked in upper circuit of 10% at Rs 142.20.
2. Tata Elxsi
Tata Elxsi is a design and technology services provider which provides support to the semiconductor industry through end-to-end solutions including VLSI design, verification, and software development.
While the stock has not showed much uptick in the last one year, in fact falling by 3.4%, according to Equitymaster, in the past, its stock price has skyrocketed sharply from Rs 500 to around Rs 10,500 levels.
“It’s the only semiconductor stock that comes close to having a same share price multiplier effect like NVIDIA,” it says.
3. Netweb Technologies
As per analysts, India’s smaller listed companies that work with Nvidia will also likely gain from its bull-run. These are firms that are connected with Nvidia’s supply chain and work with the chipmaker to distribute its products in India.
High-performance computing server manufacturer Netweb Technologies last year became a manufacturing partner for NVIDIA’s Grace CPU Superchip and GH200 Grace Hopper Superchip MGX server designs.
In May, it posted its hightest-ever quarterly and annual income and profits in May, 2024 for the quarter ending March 31, 2024, and FY24, on account of a boom in demand for artificial intelligence-based solutions and its shares have surged over 130% in the last six months.
Netweb Chairman and Managing Director of the company, Sanjay Lodha said,
AI systems are now clearly progressing towards becoming the third pillar of our growth. This is reflected by its revenue growing 2.6 times YoY, while its contribution to the company’s total revenue has grown from 7 per cent in FY’23 to 11 per cent in FY’24, underscoring its importance as a significant revenue stream.
The company’s orderbook in the financial year 2024 was at Rs 4,112 million, from Rs 711 million in FY23.
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