Nvidia, AMD shares soar on upbeat analyst predictions for AI chip demand

Shares of Nvidia (NVDA.O), opens new tab and Advanced Micro Devices (AMD) (AMD.O), opens new tab jumped on Tuesday as investor optimism over the prospects of higher demand for artificial intelligence (AI)-powered chips prompted Wall Street analysts to hike their price targets for the semiconductor giants.

Nvidia currently has a dominant position in the market for advanced AI chips, but AMD is expected to gain ground this year as the company increases deliveries of its own chips to enterprise customers, Barclays analysts led by Tom O’Malley said in an investor note.

“With supply constraints, customers are often using the entire NVDA platform in order to get priority shipments of accelerators,” the Barclays analysts wrote, adding that 2024 is “the year AI begins to open up,” as other chipmakers like AMD gain market share.

Nvidia’s stock rose 3% to $563.65 and hit a new record high, while shares of AMD surged 7.5% to $157.57, rising to their highest level in more than two years. The value of Nvidia’s shares more than tripled last year, making it the world’s most valuable chipmaker, while those of AMD more than doubled.

Barclays raised its price target for AMD shares to $200 from $120, while KeyBanc analysts raised theirs to $195 from $170. Nvidia also got a price target hike to $740 from $650 from KeyBanc. Both stocks are currently among the biggest gainers of the industry-wide PHLX semiconductor index (.SOX), opens new tab, which is up 1.15% on the session.

The median price target of the 53 analysts covering Nvidia’s stock is $625, down slightly from $627.50 a month ago, and their current collective recommendation is “buy”. On the other hand, the 47 analysts covering AMD’s shares have a median price target of $145, up from $130 a month ago, and they also collectively recommend buying the stock, according to LSEG Data.

Nvidia plans to begin mass production later this year of an AI chip designed for its Chinese customers in order to comply with tightened U.S. export rules, Reuters reported earlier this month. In December, AMD announced two new AI data center chips, as it seeks to challenge Nvidia’s flagship microprocessors. Reuters