Nvidia Corp. is benefiting from “robust demand” for artificial-intelligence servers across the board, and that could help extend the stock’s stunning rally, according to KeyBanc Capital Markets.
KeyBanc analyst John Vinh upped his price target on shares of Nvidia NVDA, -0.76% to $550 from $500 late Monday, with his new target among the highest on Wall Street: Above Vinh’s $550 target were one $767 target price and two $600 target prices, according to FactSet. C.J. Muse of Evercore ISI matched Vinh at $550.
Shares closed Monday at $421.80, and they’re up 189% so far this year.
Vinh’s heightened optimism about Nvidia’s prospects comes after he conducted channel checks in Asia. Those indicated strong interest in AI servers that are “not only coming from cloud but also enterprise and from AI startups,” he wrote in a note to clients.
Additionally, he said he sees the potential for Nvidia to benefit from delays related to an Advanced Micro Devices Inc. AMD, +0.36% product.
“Delays associated with AMD’s MI300 are likely to free up incremental capacity in 2H23, while we believe NVDA has secured enough capacity (CoWoS) to quadruple its datacenter revenues in 2024,” Vinh wrote, referring to chip-on-wafer-on-substrate, a type of packaging.
That said, Vinh also boosted his price target on shares of AMD, despite more “mixed” channel checks there, compared with the “positive” ones for Nvidia.
“While near-term challenges associated with delays of its MI300 AI server and stability issues with its PC NB Ryzen Phoenix (7040) could result in near-term risk to estimates, AI server wins at HP/El Capitan, MSFT, and Meta give us high conviction that AMD could see well over $2B in AI revenues in 2024,” Vinh wrote, as he lifted his price target on the shares to $160 from $150.
Chip companies will begin reporting earnings in the coming weeks, and one trend to watch will be how server demand is playing out more broadly. “AI servers [are] seeing outsized demand but appear to be cannibalizing traditional server,” Vihn wrote in his note to clients.
He also flagged overall weakness in China, “with no signs of a recovery, which is limiting the inventory destocking process.”
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