Nvidia Stock Sees Resurgence Despite Competition Concerns
Wall Street Analysts Reiterate Bullish Outlook
Nvidia’s stock surged as much as 2.7% early Thursday, driven by Wall Street analysts’ reaffirmed Buy ratings. Despite concerns about rising competition and potential waning demand for AI chips, analysts at Bernstein, TD Cowen, Morgan Stanley, and Truist maintained their bullish stance on the company.
Truist Securities’ William Stein Raises Price Target
“All relevant industry contacts support the dominance and superiority of NVDA’s full technology stack,” Truist Securities’ William Stein wrote on Monday. He raised his price target on the stock to $204 from $169, citing the company’s strong execution and industry dominance.
Nvidia Shares Rally, Then Reverse
Following the nods from Wall Street, Nvidia shares rallied as much as 4.8% Wednesday. However, the stock later reversed direction, ending the day down roughly 1%, as stocks fell across the board following commentary from the Federal Reserve projecting fewer rate cuts and stickier inflation in 2025.
Competition from Custom Chips
Nvidia shares have fallen as investors worry its GPUs could lose share in the broader AI chip market. Google, Meta, Microsoft, Tesla, and others have developed custom chips with Broadcom, which could potentially threaten Nvidia’s GPUs. These custom chips, called ASICs, are cheaper and tailored to a tech company’s specific AI needs.
Morgan Stanley Report Shows Custom Chip Growth
A Morgan Stanley report released Dec. 15 showed that custom chips used to run cloud AI services could grow their share of the overall AI chip market from 11% in 2024 to 15% in 2030. However, Morgan Stanley believes “history is certainly on Nvidia’s side” when it comes to maintaining dominance of the AI chip market.
Bank of America Semiconductor Analyst Weighs In
Vivek Arya, Bank of America semiconductor analyst, reiterated Wednesday that ASICs have continued to improve, but Nvidia’s strong execution continues to raise the bar for its competitors.
Concerns Over AI Spending and Innovation
Concerns loom that the Big Tech spending on AI chips that fueled Nvidia’s rise could slow down. Commentary from Microsoft and Google in their most recent earnings reports indicated that their AI spending will grow at a slower pace in the future. Additionally, concerns arise that AI models are no longer improving at their previous breakneck pace, which could also put a damper on investment.
Nvidia’s Standalone CPU Opportunity
Truist Securities’ William Stein believes NVDA will announce a standalone CPU in 2025, opening up a $35 billion market opportunity. Nvidia currently uses its Arm-based Grace CPUs alongside its Blackwell GPUs in servers it sells to customers but does not sell CPUs individually.
Leave a Reply