Technology companies continue to prioritize artificial intelligence (AI) as a major theme in their earnings reports. Analysts at Melius Research recommend Nvidia and Cisco as attractive AI investments ahead of their upcoming earnings.

Nvidia: A Strong Contender

It comes as no surprise that Nvidia (ticker: NVDA) is highlighted as a strong AI player. The company's stock value has more than tripled this year due to the success of its graphics-processing units in powering AI systems.

However, the stock has experienced minimal growth in the past three months due to concerns over tighter U.S. restrictions on exporting AI chips to China. In an alternative move, Chinese search company Baidu (BIDU) reportedly placed an AI chip order with Huawei instead of Nvidia. Despite this, Melius analyst Ben Reitzes assures Nvidia investors that there is no cause for worry. He believes Nvidia will find other buyers for its chips and expects the company to provide details about potential redistribution of products meant for China to other regions, such as the Middle East, during their earnings announcement on Nov. 21.

Software Revenue Surprise

In addition to the positive outlook on chip sales, there is potential for Nvidia to surprise investors with strong software revenue. This could further bolster confidence in the company's high valuation. Reitzes mentions that if Nvidia can demonstrate the ability to sell over a billion dollars in unbundled software and generate recurring-like revenues from their AI training service, DGX Cloud, it may retain a higher multiple as its earnings mature.

By maintaining a strategic focus on AI and exploring additional avenues of growth, technology companies like Nvidia and Cisco have positioned themselves as promising investment options in the evolving landscape of artificial intelligence.

Reitzes Bullish on Nvidia, Sets Target Price at $730

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