NVIDIA’s stock has gone up in the past month, but it still lags behind other chipmakers. Still, at least one well-known analyst believes NVIDIA is the best opportunity in the sector as earnings season approaches.
Oppenheimer’s semiconductor analyst rates Nvidia as Outperform. The price target suggests about 30% upside from current prices. NVIDIA is named a top pick. In contrast, Advanced Micro Devices and Intel both receive neutral ratings. The analyst believes Nvidia’s lead in AI accelerators is unmatched. These are specialized chips designed to speed up artificial intelligence calculations. The new Blackwell Ultra GPU rack houses several graphics processing units (GPUs). These are hardware components that rapidly process complex data for demanding tasks. This product is seen as leading the market by about two generations in performance-per-watt. This measures how efficiently a chip performs work per unit of electrical power. It means the chip delivers more computing power for each unit of energy. This applies to both training AI models and running them to make predictions.
NVIDIA’s stock has underperformed recently. Investors now focus on companies with strong central processing unit (CPU) positions in artificial intelligence (AI) server setups. In these setups, CPUs act as the main chips that execute instructions and manage server tasks. Intel and AMD have jumped in value. Investors expect new types of AI to boost demand for server CPUs. These are systems capable of operating independently without direct human intervention. NVIDIA has little direct involvement in this area. Over the past month, Intel’s stock has been up more than 50%. AMD has been up nearly 40%. NVIDIA’s 15% gain seems small in comparison.
Even though NVIDIA has lagged recently, an Oppenheimer analyst says its valuation still stands out. The stock trades at about 17 times its expected 2027 earnings. This is lower than the sector average of around 20 times. Usually, NVIDIA trades at a higher price compared to its peers. Its strong position in AI chips typically supports a premium valuation.
Whether Nvidia can close the performance gap with its competitors may depend on its next quarterly results. These results should give more insight into demand for the Blackwell product and growth in data center revenue from large customers.
