NVIDIA stock (NVDA) rose to 2.7 early Thursday as Wall Street analysts reiterated a buy rating on the stock despite concerns about increased competition and a potential decline in demand for artificial intelligence chips. % also increased.
Over the past few days, Wall Street analysts at Bernstein, TD Cowen, Morgan Stanley and Trust have maintained their bullish outlook on the company.
“All relevant industry participants support the advantages and advantages of NVDA’s complete technology stack,” William Stein of Trust Securities wrote on Monday. He raised his price target for the stock from $169 to $204.
Nvidia shares rose as much as 4.8% on Wednesday after Wall Street agreed. But stocks then reversed course, ending the day down about 1% as stocks slumped across the board following comments from the Federal Reserve that it expects interest rate cuts to slow and inflation to pick up in 2025. .
Despite Thursday’s early morning rally, Nvidia stock is still down about 11% from its record closing price of $148.88 in early November.
NVIDIA stock falls as investors worry NVIDIA’s GPUs could lose share in the broader AI chip market given that Nvidia customers are developing their own custom chips I am doing it. Google (GOOG) and Meta (META) developed a chip with Broadcom (AVGO). Microsoft (MSFT), Tesla (TSLA), and Amazon (AMZN) also manufacture their own custom chips. Broadcom’s announcement last week that it is developing chips for two more customers, believed to be ChatGPT maker OpenAI and Apple (AAPL), boosted its stock price and pushed Nvidia stock in the opposite direction.
These custom chips, called ASICs (application-specific integrated circuits), could threaten Nvidia’s GPUs because they are cheaper and tailored to tech companies’ specific AI needs. Custom chips used to run cloud AI services will account for 15% of the total AI chip market by 2030, up from 11% in 2024, according to a report released by Morgan Stanley on December 15th. There is a possibility that
Still, Morgan Stanley said that “history has certainly been on Nvidia’s side” when it comes to maintaining its dominance in the AI chip market. “We believe ASICs continue to improve, but Nvidia’s strong execution continues to raise the bar for our competitors.”
That’s a talking point for NVIDIA that Bank of America semiconductor analyst Vivek Arya reiterated on Wednesday’s episode of the Opening Bid podcast (video above).
There are also concerns that Big Tech’s spending on AI chips, which was the driving force behind Nvidia’s rise, will slow. Comments in Microsoft and Google’s latest earnings reports indicate that spending on AI will increase at a slower pace in the future. There are also concerns that AI models are no longer improving at the breakneck pace they once were, which could dampen investment.
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