Nvidia Corp. continues to experience strong demand for artificial intelligence (AI) servers, which is driving the company’s impressive stock rally, according to KeyBanc Capital Markets.
Analyzing the situation, KeyBanc analyst John Vinh raised the price target for Nvidia’s shares from $500 to $550 – one of the highest targets on Wall Street. Other analysts who share Vinh’s optimism include C.J. Muse of Evercore ISI, who also set a target price at $550.
As of Monday’s closing, Nvidia shares were valued at $421.80, reflecting a remarkable 189% increase year-to-date.
Revolutionizing the AI Chip Market
Vinh’s positive outlook for Nvidia stems from his channel checks in Asia. These checks revealed significant interest in AI servers not only from cloud computing providers but also from enterprise clients and AI startups. This widespread demand positions Nvidia favorably in the market.
Moreover, Vinh believes Nvidia can take advantage of delays associated with Advanced Micro Devices Inc.’s (AMD) product, the MI300. These delays may create additional capacity opportunities in the second half of 2023. Vinh also notes that Nvidia has already secured sufficient capacity with their chip-on-wafer-on-substrate (CoWoS) technology, enabling them to quadruple their datacenter revenues by 2024.
Overall, Nvidia Corp.’s robust performance in the AI server market and its strategic positioning make it a key player in the artificial intelligence industry.
Don’t Miss: No Replacement for Nvidia in AI Stock Plays
According to an analyst, there is no replacement for Nvidia when it comes to AI stock plays. While channel checks for AMD have been more mixed, the analyst still increased the price target for AMD shares.
Although there are some near-term challenges for AMD, such as delays in its MI300 AI server and stability issues with its PC NB Ryzen Phoenix (7040), the company’s AI server wins at HP/El Capitan, MSFT, and Meta indicate potential AI revenues of over $2B in 2024. As a result, the analyst raised the price target for AMD shares from $150 to $160.
Opinion: AI Boosts Stock of Lesser-Known Silicon Valley Computer Maker
The upcoming earnings reports from chip companies will shed light on server demand trends. It is worth noting that AI servers are experiencing higher-than-usual demand and may be cannibalizing traditional servers. The analyst also highlighted the overall weakness in China, which is limiting the inventory destocking process and showing no signs of recovery.
