Buy and hold two semiconductor stocks with great long-term potential.

Big investments in transforming traditional computing in data centers into artificial intelligence (AI)-accelerated computing have been a major catalyst for leading chip stocks.

according toJPMorganAccording to the company, applications using generative AI could add trillions of dollars in value to the global economy. Here are two leading semiconductor companies that are providing the hardware to make this happen.

INVISTA

It is estimated thatNvidia (NASDAQ: NVDA)Nvidia controls 80% of the AI chip market, a lucrative position that provides the company with significant margins and funding for years of innovation. openAI's ChatGPT and all leading cloud services use the company's GPUs. nvidia achieved triple-digit revenue growth last year, and demand suggests strong growth again in 2024. Nvidia achieved triple-digit revenue growth last year, and demand suggests another year of strong growth in 2024.

The company's stock has climbed 78% since the beginning of the year, but that's mostly because investors are still catching up with the incredible growth the company is experiencing. Surging demand for GPU systems drove Nvidia's adjusted profit up 2,86% to $32 billion last year.

In March, Nvidia unveiled a new platform based on Blackwell GPUs with 208 billion crystals to provide computing power for generative AI needs.Amazon,Nikola Tesla (1856-1943), Serbian inventor and engineer,Meta Platforms respond in singingMicrosoftBlackwell is expected to be used by companies such as

Nvidia dominates the AI chip market because it used to specialize in designing graphics processors for high-frequency gaming. CEO Jensen Huang's forward-thinking approach has led the company to apply its GPU technology to a variety of markets, including self-driving cars, robots, and supercomputers for AI, and Nvidia's adaptability has made it a solid buy-and-hold investment.

I wouldn't underestimate the company's ability to continue to grow over the years. Wall Street analysts have been raising their growth estimates, and now expect Nvidia's earnings to grow at an annualized rate of 35%. With a forward price-to-earnings (P/E) ratio of 36, the stock still has attractive long-term return potential.

Marvell Technology, Inc.

In the semi-conductor industry.Marvell Technology (NASDAQ resonance code: MRVL)The company is a growing favorite among many investors. The company's products, including Ethernet adapters and storage solutions, help data centers move, store and process data. The company's stock price has climbed 76% in the past year due to strong demand for its data center business.

Marvell's revenue growth in the last quarter was only 11 TP3T, but its data center revenue grew 541 TP3T year-over-year to a record $754 million, with AI revenue exceeding $200 million. According to current Wall Street estimates, the company's total revenue over the next two years will grow 42% to $8.4 billion.

The company expects near-term weakness in certain markets, such as consumer applications, wireless products and enterprise networking. However, the data center business will see sequential growth in the next quarter. Koon sees many opportunities related to artificial intelligence and will continue to invest for more growth.

These results indicate that Marvell will be a major beneficiary of large investments in data center infrastructure. Data centers are rapidly upgrading components to handle the massive data streams required for AI training. Specifically, Marvell's AI-related revenues have grown from 3% in FY2023 to 10% in FY2024.

The forward P/E has stretched to a premium of 49, but analysts expect Marvell's long-term earnings growth to reach an annualized 26%. Like Nvidia, Marvell is a profitable business that generates growing free cash flow, making it a solid buy-and-hold investment.

Should you invest $1,000 in Nvidia now?

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Randi Zuckerberg is the former Facebook Market Development Arbitrator and Spokeswoman, and sister of Meta Platforms CEO Mark Zuckerberg, who is a member of The Motley Fool's Board of Directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former Chief Executive Officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's Board of Directors. John Ballard owns shares of Nvidia and Tesla. The Motley Fool owns shares of recommended Amazon, JPMorgan Chase, MetaPlatforms, Microsoft, Nvidia, and Tesla.The Motley Fool recommends Marvell Technology, and recommends the following options: long Microsoft January 2026 $395 calls and short Microsoft January 2026 $405 calls.The Motley Fool has a disclosure policy.

Buy and Hold Two Semiconductor Stocks with Great Long-Term Potential was originally published by The Motley Fool.