Nvidia stands to be the main beneficiary as explosive growth in artificial intelligence boosts demand for semiconductors, but there are reasons to be optimistic for Intel and Advanced Micro Devices in the longer term, according to Vijay Rakesh, an analyst at Mizuho Securities.
(ticker: NVDA) is expected to generate around $300 billion in AI-specific revenue in 2027, according to Rakesh. This is based on the assumption that it can maintain a market share of around 75% in chips used to power servers for AI technology, compared to about 90% currently.
Rakesh raised his target for Nvidia’s stock price to $530 from $400 previously, while reiterating a buy note on the stock. This values the company at around 49 times its projected earnings.
Nvidia shares rose 0.5% to $445.20 early Monday.
“As the demand for generative AI accelerates, we see significant opportunities for hardware vendors powering the higher compute demands for large-language models, particularly AI powerhouse Nvidia,” Rakesh wrote.
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This projection does not entirely close the door to potential Nvidia competitors. Rakesh Projects
is online for a market share of around 5% of the AI server market in 2027.
“We believe AMD is well positioned as a competitor to NVDA with a cheaper GPU (graphics processing unit), but we see it struggling to take much additional share in the near term due to NVDA’s technological advantage and market-first position,” Rakesh wrote.
He reiterated a buy rating and target price of $140 for AMD. Shares of the company were down 0.5% at $110.37 early Monday.
Rakesh also raised his price target on
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(INTC) at $33 instead of $30, with a neutral rating. Intel stands to benefit from higher valuations placed on all semiconductor stocks, as well as additional AI revenue, he wrote. Intel shares rose 0.9% to $34.31.
Write to Adam Clark at adam.clark@barrons.com
