According to Mizuho Securities analyst Vijay Rakesh, Nvidia is poised to be the biggest winner in the growing field of artificial intelligence (AI), but Intel and Advanced Micro Devices (AMD) also have reasons for optimism in the long run.
Nvidia’s Dominance in the AI Market
Rakesh predicts that Nvidia will rake in approximately $300 billion in AI-specific revenue by 2027. This estimate is based on the assumption that the company can maintain a market share of around 75% in server chips used for AI technology, a slight decline from its current 90% market share.
As a result of this analysis, Rakesh has raised his target price for Nvidia stock from $400 to $530. With a Buy rating, he values the company at approximately 49 times its projected earnings. As of Monday, Nvidia shares were up 0.5% at $445.20.
Hardware Suppliers Powering the AI Revolution
Rakesh emphasizes the significant opportunities for hardware suppliers in meeting the growing compute needs of generative AI, particularly highlighting Nvidia as an AI powerhouse. The increasing demand for large-language models reinforces this trend.
While Nvidia remains a dominant force, Rakesh does not discount potential competition. He projects that AMD could capture around 5% of the AI server market share by 2027. Despite being a competitor to Nvidia, AMD will struggle to make significant gains near-term due to the technological advantage and first-to-market position enjoyed by Nvidia.
With a Buy rating and a $140 target price, Rakesh maintains an optimistic outlook for AMD. However, as of Monday, the company’s shares were down 0.5% at $110.37.
Intel’s Positive Outlook
Rakesh has also adjusted his target price for Intel from $30 to $33, with a Neutral rating. He expects Intel to benefit from higher valuations in the semiconductor industry as a whole, along with additional revenue generated by AI.
As of Monday, Intel shares rose 0.9% to $34.31.