The expansion of generative artificial intelligence (AI) is fueling increased demand for sector-related technologies, subsequently reshaping the hardware tech sector. Semiconductors, networking, and advanced industrial tech are all reaping the benefits, according to a Monday investor note from Needham & Co.

Semiconductors, the bedrock of AI, are seeing an upswing as AI permeates various sectors. Needham told investors that the following stocks are among the top beneficiaries:

  • NVIDIA Corporation (NVDA  ) - $300 price target
  • Micron Technology Inc (MU  ) - $71 price target
  • Cerence Inc (CRNC  ) - $42 price target
  • Vicor Corp (VICR  ) - $55 price target
  • Monolithic Power Systems Inc (MPWR  ) - $500 price target
  • Marvell Technology Inc (MRVL  ) - $50 price target
  • Credo Technology Group Holding Ltd (CRDO  ) - $15 price target
NVIDIA's H100 product is reportedly used by major Cloud Service Providers for large language models, expected to aid NVIDIA with the advent of ChatGPT-4.

Networking is also on the rise. Arista Networks Inc (ANET  ), $195 price target, benefits from AI infrastructure growth as AI training necessitates large data lakes and thrice the conventional networking bandwidth.

Arista's AI infrastructure could enhance its long-term growth by an additional 5%-10%.

AI-based machine vision solutions are becoming indispensable on factory floors. Cognex Corporation (CGNX  ), $58 price target, is pioneering the trend with its AI-based solutions combining precision and flexibility, facilitating rapid AI application setup for industries like automotive, consumer electronics, logistics, and general manufacturing.

Broad AI adoption has also triggered demand for Micron. Cerence gained recognition for using generative AI in next-gen voice assist products. And Vicor is set to profit from the growing importance of power delivery and efficiency in AI computing.

Monolithic leads in supplying power management solutions for high-performance computing in AI, contributing significantly to the high-power SKUs market share.

Similarly, Marvell Tech and Credo Tech offer vital networking and connectivity solutions, with Marvell's wide product range and Credo's unique offerings meeting the growing demand for higher bandwidth speeds.

The analysts said NVIDIA, a key player in the AI hardware supply chain, along with foundry and Electronic Design Automation firms like Taiwan Semiconductor Mfg. Co. Ltd. (TSM  ), $110 price target, Cadence Design Systems Inc (CDNS  ), $235 price target, and Synopsys Inc (SNPS  ), $450 price target, are crucial to the semiconductor manufacturing and design ecosystem.