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In their latest note on the booming sector, the analysts highlight that the “demand environment for AI training has continued to pick up since NVIDIA reported,” citing reports from industry contacts showing “daily new orders from customers that were not contemplated as major customers until now.”
“It seemed clear when NVIDIA reported that we would be in a beat-and raise environment for a while, but that sentiment is continuing to increase,” said analysts, as they noted that due to being first-to-market “NVDA should trade at a premium to peers given the higher probability of upward revisions near term,” dubbing the stock as the only “2023 leader”.
As such, the analysts raised “multiple to 50x next year, which reflects the expansion in all AI names, as well as higher conviction in next 18 months numbers given the higher AI exposure,” and raised their Price Target on NVDA to $500 from $450.
In their report, the analysts also raised targets on some of the company’s key competitors, citing the broader boom in the industry that should help those companies through 2024 and forward.
Advanced Micro Devices (NASDAQ:AMD), Target raised to $138 from $97: “Unlike NVIDIA, the company is unlikely to post near term upside… Longer-term we still have conviction that the company’s server business remains on a share-gaining path, which will resume in a stronger way once budgets expand again to accommodate both AI investments and legacy infrastructure upgrades.”
Marvell Technology (NASDAQ:MRVL), Target raised to $68 from $55: MRVL’s “cloud silicon wins, as well as the AI networking wins, are crucial building blocks of many large customers’ AI strategies, but are largely cannibalizing non-AI hardware, which MRVL has a large amount of exposure to. Given the enthusiasm for AI, but the limited earnings upside potential, we are raising our PT multiple from 35x to 43x MW estimates.”
Intel (NASDAQ:INTC), Target raised to $38 from $31: “Intel does have material AI opportunity… We see the principal near term opportunities from Habana Labs/Gaudi, specialty silicon that the company acquired a couple of years ago, that could drive material revenue in inference next year. We also note Intel’s materially lower valuation vs. peers – especially on an EV/sales basis.”
