Nvidia is likely to be the key beneficiary as the explosive growth of artificial intelligence boost demand for semiconductors, but there is reason to be optimistic for Intel and Advanced Micro Devices in the longer term, according to Mizuho Securities analyst Vijay Rakesh.
Nvidia
(ticker: NVDA) is in line to generate around $300 billion in AI-specific revenue in 2027, according to Rakesh. That is based on the assumption it can maintain a market share of around 75% in the chips used to power servers for AI technology, down from roughly 90% currently.
Rakesh raised his target for Nvidia’s stock price to $530 from $400 previously, while reiterating a Buy rating on the stock. That values the company at about 49 times its projected earnings.
Nvidia shares were up 0.5% at $445.20 early on Monday.
“With demand for generative AI accelerating, we see significant opportunities for hardware suppliers powering the higher compute needs for large-language models, particularly AI powerhouse Nvidia,” Rakesh wrote.
That projection doesn’t entirely shut the door on would-be competitors to Nvidia. Rakesh projects
AMD
is in line for a market share of about 5% of the AI server market in 2027.
“We believe AMD is well-positioned as a competitor to NVDA with a lower-priced GPU [graphics-processing unit], but we see it struggling to take much incremental share near-term due to NVDA’s technology advantage and first-to-market position,” Rakesh wrote.
He reiterated a Buy rating and $140 target price for AMD. The company’s shares were down 0.5% at $110.37 early on Monday.
Rakesh also raised his target price on
Intel
(INTC) to $33 from $30, with a Neutral rating. Intel should benefit from higher valuations being given to all semiconductor stocks, as well as extra revenue from AI, he wrote. Intel shares rose 0.9% to $34.31.
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