AI High: NVIDIA, AMD shares jump to a new high, analysts optimistic about AI hardware

Shares of NVIDIA and Advanced Micro Devices experienced significant gains over the course of the week.

Investor optimism surrounding the increasing demand for artificial intelligence AI-powered chips prompted Wall Street analysts to revise upward their price targets for these industry giants.

NVIDIA currently holds a dominant position in the advanced AI chip market, but AMD is poised to make strides in the coming year. Analysts at Barclays, led by Tom O’Malley, noted in an investor note that AMD is expected to gain ground as it ramps up deliveries of its own chips to enterprise customers, as per a Reuters report.

The Barclays analysts highlighted the impact of supply constraints, stating that customers are resorting to utilizing the entire NVDA platform to secure priority shipments of accelerators. They predict that 2024 will mark the opening up of the AI market, with other chipmakers like AMD gaining significant market share.

Following this positive outlook, NVIDIA’s stock experienced a 3 per cent surge to $563.65, reaching a new record high. Simultaneously, shares of AMD witnessed a robust 7.5 per cent increase, reaching $157.57 and achieving their highest level in over two years.

In the previous year, NVIDIA’s shares more than tripled, establishing the company as the world’s most valuable chipmaker, while AMD’s shares more than doubled.

Barclays responded to this bullish trend by raising its price target for AMD shares from $120 to $200, while KeyBanc analysts increased theirs to $195 from $170.

NVIDIA also received a price target hike from KeyBanc, moving from $650 to $740. Both stocks are currently leading gainers in the industry-wide PHLX semiconductor index, which is up 1.15 per cent in the session.

According to data from LSEG, the median price target for Nvidia’s stock among the 53 analysts covering it is $625, slightly down from $627.50 a month ago, with a unanimous “buy” recommendation, as per Reuters.

On the other hand, the 47 analysts covering AMD’s shares have set a median price target of $145, up from $130 a month ago, and also unanimously recommend buying the stock.

In response to tightened US export rules, NVIDIA is set to commence mass production later this year of an AI chip specifically designed for its Chinese customers, as reported by Reuters earlier this month.

In December, AMD made its move to challenge NVIDIA’s flagship microprocessors by announcing two new AI data centre chips. The battle for supremacy in the AI chip market continues to intensify as these semiconductor giants position themselves for growth and innovation.

(With input from agencies)

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