NVIDIA Corp. (NASDAQ: NVDA) and Broadcom Inc. (NASDAQ: AVGO) remain attractive ways to play the artificial intelligence infrastructure boom, according to Jay Peters, portfolio manager at NewEdge Wealth. Peters told CNBC on Thursday that strong earnings growth, profitability and cash flow continue to support both chipmakers. He remains bullish despite concerns about AI dealmaking, Federal Reserve policy and growing resistance to data center construction.
NVIDIA Deal Raises Financing Questions
Peters said NVIDIA's reported Hugging Face deal could strengthen the company's push to offer customers a more comprehensive AI platform. Greater vertical integration could also expand NVIDIA's role across the AI ecosystem.
However, Peters acknowledged concerns about increasingly large AI investments and "circular financing" across the industry.
He said NVIDIA and Broadcom generate enough free cash flow and operate with strong enough margins to absorb large acquisitions. Still, rising leverage across the AI ecosystem could eventually become an issue investors need to digest.
Peters said both companies trade at roughly 19 to 20 times forward earnings while offering strong profitability and growth prospects.
AI Spending Could Beat Expectations
Despite recent volatility, Peters sees little evidence that the broader AI infrastructure cycle is weakening.
He expects hyperscaler capital spending to grow about 30% next year. Even that estimate could prove conservative as AI adoption drives greater demand for computing capacity.
"We're still incredibly short compute in this country," Peters said, arguing that the shortage will fuel a multiyear infrastructure buildout.
Peters also acknowledged several near-term market headwinds. Risk appetite has weakened, investors face an unfavorable seasonal period and uncertainty around Federal Reserve policy remains elevated.
Still, he said the fundamental forces supporting AI investment remain solid, even after enthusiasm cooled from second-quarter highs.
Price Action: NVIDIA shares were up 2.09% at $233.22 and Broadcom shares were down 0.47% at $355.47 at the time of publication on Friday, according to Benzinga Pro data.