Equities
Nvidia's stock slightly dips amid AI chip competition, with analysts bullish, raising target prices due to strong market position and demand.
By Bill Bullington
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Nvidia shares experienced a slight decrease of 0.3% in premarket trading, settling at $903.30, following a 4.1% increase the previous day to close at $906.16. This fluctuation comes amidst anticipation of how Nvidia's new range of Blackwell chips will perform in the market, especially with technology companies set to report their earnings in the upcoming weeks. Raymon James analyst Srini Pajjuri expressed optimism, dismissing concerns over a potential pause in customer spending ahead of the Blackwell launch, citing sustained demand for Inferencing that outpaces GPU supply. Pajjuri has subsequently raised his target price on Nvidia to $1,100 from $850, maintaining a Strong Buy rating.
The semiconductor industry is witnessing a surge in in-house AI chip announcements, notably from Intel and Marvell, which is speculated to be developing an AI accelerator for Microsoft with production expected to ramp up in 2026. This development underscores the increasingly complex relationships Nvidia has with its customers, including Google, which has opted to train its Gemini AI model on TPU processors while also incorporating Nvidia's Blackwell chips and H100 processors into its Cloud services. Despite this, Nvidia CEO Jensen Huang emphasized the company's competitive edge in total cost of ownership, highlighting efficiency in power and cooling demands as key advantages.
Amidst the evolving AI chip market, analysts remain bullish on Nvidia's prospects. Morgan Stanley's Joseph Moore and BofA Securities' Vivek Arya have both expressed confidence in Nvidia's market position. Moore raised his target price to $1,000 from $795, citing Nvidia's high return on investment processors as a decisive factor for customers. Arya projected that Nvidia would retain over 75% of the AI accelerator market, expected to grow significantly in the coming years, despite new entries from Intel, Alphabet, and others. Arya's optimism is bolstered by Nvidia's Blackwell product's performance and the company's strong enterprise presence.
"We believe concerns regarding a potential pause in customer spending ahead of Blackwell ramps are unwarranted as Inferencing demand continues to outpace GPU [graphics-processing unit] supply."
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