There is no denying this technological power Nvidia (NASDAQ:NVDA) has been the centerpiece of the artificial intelligence (AI) movement thus far.

Its processors are the heart and soul of most data centers. Its stock has disappeared from the broader market since early 2023, when the artificial intelligence revolution reached full swing. Shares are up more than 800% during this two-year period, compared to S&P 500′s an advance of 58% for the same period.

However, as is always the case, things change. Competition sets in. Technology evolves. Customers begin to think about more specific solutions to their unique challenges, and investors’ euphoric interest in the shares of an industry leader fades.

Anyone considering acquiring – or maintaining – a stake in Nvidia might instead consider one of the tech sector’s other top growth prospects: Marvell Technology (NASDAQ:MRVL).

Marvell Technology, Up Close and Personal

You don’t know him? You are not alone. Its sub-$100 billion market cap just doesn’t turn heads, especially when compared to Nvidia’s $3 trillion market cap. Marvell also hasn’t really caught the attention of many hedge funds and money managers who often have their finger on the pulse of the proverbial “next big thing.” From the motley fool recent look With 16 hedge funds owned by different billionaires, the company wasn’t a major position for any of them – but maybe it should be.

Marvell is not a favored name for investors looking for a new way to connect to the artificial intelligence movement. However, it remained there from the beginning. This company makes everything from data center switches to hard drive controllers to computer processors that you don’t hear much about, but would definitely notice if they didn’t exist. Its technology is found in 5G connectivity equipment, automobiles and, perhaps most notably, AI data centers that increasingly need entire walls of motherboards to work together as a single, massive digital brain.

Earlier this week, for example, the company unveiled its new Aquila DSP (digital signal processor), capable of processing 1.6 trillion bits of digital data every second. This energy-efficient technology can be used in densely populated data centers with up to 20 kilometers of connectivity cabling. That’s why technology market research firm Dell’Oro Group estimates that the market for this new type of data center processor will grow at an average annual rate of 200% over the next five years.

This is just one type of technology Marvell is creating. Also earlier this week, the company announced a breakthrough in high-bandwidth memory module (or HBM) design. This solution is expected to provide AI platforms with 25% more computing power than comparable systems currently, without taking up additional space. Mordor Intelligence estimates that this better-developed global HBM market is expected to grow at an annualized rate of nearly 26% through 2029.

Nvidia’s processors are workhorses, of course. If artificial intelligence is to enter its next chapter, the technology these AI processors are connected to will also need to be next-generation. Marvell Technology is leading this quiet charge.

Still optimistic despite recent gains

For better or worse, Marvell’s growth prospects are increasingly reflected in the stock price. Shares are up more than 200% since the end of 2022, and about half of that gain has materialized only since the middle of this year, as its research and development efforts – and the need for them – took center stage.

The big surge appears to be a tough act to follow, leaving shares valued at a frothy 40 times higher than next fiscal year’s projected earnings per share of $2.76. However, this is arguably one of those cases where any decent decline is a buying opportunity.

While such a valuation seems exorbitant relative to the broader market, that’s not how growth stocks trade these days. Such actions can maintain and even increase a strong premium based not on next year’s likely profits, but rather on the company’s plausible profit five or even ten years from now.

There is no doubt that Marvell technology is well positioned to capture at least its fair share of AI. technology predictable market growth. As Benchmark analyst Cody Acree explains of his recent increase in the company’s target price for the stock, “Marvell is one of only two custom silicon vendors providing competitive GPU accelerators NVDA to three of the largest hyperscale data center companies in the industry, with Amazon and Google hiring Marvell to co-develop custom accelerators specifically tailored to their specific AI workloads.

Acree adds to his optimistic thesis: “After years of commitment, development and qualification, these processors are currently in full expansion. production turnover in volumewhich, combined with its strong progress in optical connectivity, Marvell would be on track to “significantly exceed” its FY25 and FY26 targets for AI to bring in $1.5 billion and $2.5 billion, respectively. .

Data source: StockAnalysis.com. Table by author.

He is not the only bull. The vast majority of the analyst community still considers Marvell stock a strong buy, despite its recent huge gains.

If you like it, buy it already

Will billionaires, hedge funds and other institutional stock pickers ever join in and add Marvell technology to their portfolios? Maybe. Or maybe not. Nobody knows for sure.

Don’t let that deter you just because Marvell isn’t currently a favorite among the proverbial “big money” investors. Many of these savvy investors also weren’t entirely on board with Nvidia when it started roaring. It may take this crowd a while to find a new sweetheart and then convince themselves to take the plunge.

If you like the stock’s underlying story and long-term risk/reward scenario, don’t hesitate to buy now, even as it nears its recently hit all-time high.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. James Brumley holds positions at Alphabet. The Motley Fool holds positions and recommends Alphabet, Amazon and Nvidia. The Motley Fool recommends Marvell technology. The Motley Fool has a disclosure policy.