The stock market could potentially continue higher in the months ahead, this time led by smaller companies than just a handful of large-cap giants. That includes smaller tech companies that can also supply hardware for the AI boom.
While the boom will eventually end, this quarter’s earnings reports across corporate America suggest that the AI spending boom is alive and well. And that plenty of other companies have yet to see the biggest benefit from this trend.
One potential winner is chipmaker Marvell Technology (MRVL). The company reported strong demand for its AI chips, allowing for shares to pop higher.
But with the stock up only about 30% over the past year, it’s still undervalued relative to its further earnings potential.
Marvell shares trade at 22 times earnings, about in-line with the overall stock market. And with sales starting to perk up, so too will the company’s other valuation metrics in the quarters ahead.
Action to take: Investors could consider building a starting stake here, and using any market uncertainty over the next few months to add to that position. At current prices, shares also pay a 0.3% dividend.
For traders, the January 2025 $90 calls, last trading for about $2.90, could see high double-digit returns, especially if shares see a strong year-end rally into 2025.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.