Goldman looks at European chip stocks after Nvidia's results

Investing.com - Goldman Sachs has digested AI darling Nvidia’s first-quarter blow-out results, and takes a look at the European chip stocks to hold in its wake.

Nvidia’s revenue in the three months to April 28 soared by 262% from a year ago to $26 billion, beating Wall Street estimates of $24.7 billion. In the current quarter, Nvidia (NASDAQ:NVDA) expects the top-line figure to continue growing to $28 billion. Analysts had pencilled in a quarterly forecast of $26.8 billion.

Data center revenue, which roughly reflects the performance of its artificial intelligence chips, spiked by 427% year-on-year to a record $22.6 billion. Nvidia's data center graphics processing units have become essential parts of the computing power undergirding generative AI products.

“We see the commentary around the continued strength of demand in Nvidia’s existing products (e.g. H100), and new launches such as H200 and Blackwell platforms, as well as contributions from Sovereign AI as a positive,” said analysts at Goldman Sachs, in a note dated May 23.

“More broadly, we expect this continued demand momentum to drive the demand of leading-edge Logic/Memory chips in the near-to-medium term, which is a positive for the European Semicap players ASML (AS:ASML), ASM International (AS:ASMI) and BE Semiconductor Industries (AS:BESI).

Nvidia is working on an new-generation of GPUs, the bank said, and these new product development plans could be long-term drivers of advanced semis nodes (to fulfill performance requirements for more complex AI workloads), and could act as positive tailwinds for ASML and ASMI, given their EUV and single wafer-ALD tools respectively are of strategic importance to facilitate node shrinkage and architectural transitions to support the next generation of AI chips.

Goldman has a buy rating on ASML, ASMI and BESI.