nvidia (NVDA) stock jumped as much as 2.7% early Thursday, as Wall Street analysts reiterated their buy rating on the stock despite concerns about increased competition and the possibility of falling AI chip demand.
Over the past few days, Wall Street analysts Bernstein, TD Cowen, Morgan Stanley (M.S), and trustee (TFC) has maintained a bullish outlook on the company.
“All relevant industry contacts support the dominance and superiority of NVDA’s entire technology stack,” William Stein of Truist Securities wrote on Monday. He raised his price target on the stock to $204 from $169.
Shares of Nvidia rose as much as 4.8% on Wednesday, following the approval from Wall Street. But the stock later reversed course, ending the day down about 1%, as stocks fell across the board Federal Reserve Comment Projecting Low Rate Cuts and Stable Inflation in 2025.
Even with Thursday morning’s gains, Nvidia stock is still about 11% off its record close of $148.88 in early November.
Shares of Nvidia have fallen as investors worry that its GPUs could lose share in the broader AI chip market as its customers develop their own custom chips. google (GOOG) and meta (META) developed the chips with Broadcom (AVGO). Microsoft (MSFT), Tesla (TSLA), and Amazon (AMZN) also make their own custom chips. Broadcom’s announcement that it is developing chips for two more customers is believed to be ChatGPT-Maker OpenAI And apple (AAPL), The chipmaker’s stock rose Last week and Nvidia sent in the opposite direction.
These custom chips, called ASICs (Application-Specific Integrated Circuits), could potentially pose a threat to Nvidia’s GPUs, given that they are cheap and tailored to the tech company’s specific AI needs. are A Morgan Stanley report released on December 15 showed that custom chips used to run cloud AI services could increase their share of the overall AI chip market from 11% in 2024 to 15% in 2030.
Still, Morgan Stanley said “history is definitely on Nvidia’s side” when it comes to maintaining its dominance of the AI chip market. “We think ASICs continue to improve, but Nvidia’s strong execution continues to raise the bar for its competitors.”
It’s a point on Nvidia that Bank of America semiconductor analyst Vivek Arya Repeated Wednesday in an episode of the Opening Bid podcast (Video above)
In addition, there are concerns that big tech spending on AI chips that fueled Nvidia’s rise could slow. Comment from Microsoft And Google Their most recent earnings reports indicated that their AI spending will grow at a slower pace in the future. and are Concerns That AI models are no longer improving On their previous poor pace, that could also put a damper on investment.
