AI optimism drives stock gains for AMD and Nvidia

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Nvidia and AMD shares jump on AI optimism. Rising demand for AI chips is prompting analysts to raise expectations.

Higher demand for AI chips has prompted Wall Street analysts to raise their price targets for both Nvidia and AMD. Shares of Nvidia and AMD rose on Tuesday as investor optimism over the prospect of higher demand for AI chips led Wall Street analysts to raise their price targets for both AMD and Nvidia.


Nvidia currently holds a dominant position in the market for advanced AI chips, but AMD is expected to gain ground this year as the company ramps up shipments of its own chips to business customers, Barclays analysts led by Tom O'Malley said in an investor note.

"With supply constraints, customers are often using the entire Nvidia platform to get priority shipments of accelerators," the Barclays analysts wrote, adding that 2024 is "the year AI starts to open up," with other chipmakers like AMD gaining market share.


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

Barclays raised its price target on AMD shares to $200 from $120, while KeyBanc analysts raised theirs to $195 from $170. Nvidia also had a price target raised to $740 from $650 by KeyBanc.

The average 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 stock 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 to comply with tightened US export rules. In December, AMD announced two new AI data center chips as it seeks to challenge Nvidia's flagship microprocessors.

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