Nvidia vs AMD: Why BofA Global Research Isn’t Concerned About Nvidia’s AI Chip Competition

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Nvidia’s Rival AMD Makes Case for AI Chips, but Analysts Are Bullish on Nvidia
By Tae Kim

Nvidia’s main rival, Advanced Micro Devices, made its case this week on why customers should buy its artificial-intelligence chips. But BofA Global Research isn’t too concerned about the latest competition for Nvidia.

On Wednesday, analyst Vivek Arya reiterated his “Top Pick” Buy rating for Nvidia stock and reaffirmed his $700 price target for the shares. Earlier that day, AMD announced its Instinct MI300X accelerators were available for sale to data center customers and server makers. The MI300X is AMD’s answer to Nvidia’s AI H100 data center chips.

“While peer AMD launched its first competitive MI300 product (compares against NVDA circa 2022 H100) and did not present a future roadmap, NVDA has a solid multi-year roadmap with annual product cadence (versus 2 years prior),” Arya wrote.

In early trading Thursday, Nvidia stock was up 2% to $464.26, while AMD shares rallied 9% to $127.34.

The analyst noted Nvidia will soon release its follow-up to the H100, called the H200, next year and then launch another GPU called the B100 by the end of 2024. He said the chip maker’s leadership in the AI model-training market should extend into the inferencing market, which is the process of generating answers from those AI models.

Arya also said Nvidia stock’s valuation is attractive, trading at about 22 times 2024 per-share earnings for a company he predicts will grow its earnings by 55% to 60% year over year.

“NVDA is still supply constrained but improving every quarter with multi-quarter growth visibility, and well aligned with customers who take a year to design new AI data centers,” the analyst wrote.

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Nvidia currently dominates the market for chips used for AI applications. Start-ups and corporations prefer the company’s products because of its robust software programming ecosystem, CUDA.

It seems that while AMD’s latest announcement may have given some investors pause, many analysts remain bullish on Nvidia’s future prospects in the AI chip market.

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