Chip companies have been in focus this year due to the massive opportunity created by the generative artificial intelligence ambitions of tech giants following the success of OpenAI’s ChatGPT. Furthermore, after suffering for several quarters, many semiconductor companies could benefit from the gradual recovery expected in the PC market next year. With this background in mind, we used TipRanks’ Stock Comparison Tool to rank Advanced Micro Devices (NASDAQ:AMD), Nvidia (NASDAQ:NVDA), and Intel (NASDAQ: INTC) to find the best chip stocks according to Wall Street experts.
Advanced Micro Devices (NASDAQ:AMD)
While Nvidia has stolen the spotlight from all other semiconductors this year due to the demand for its graphics processing units (GPU) in generative AI, several analysts remain optimistic about the potential of Advanced Micro Devices to seize the opportunities in the generative AI space.
The company is expected to benefit in the coming quarters from demand for its latest MI300 chips and a recovery in the PC market. During the Q3 earnings call, management said it expects AMD Data Center GPU revenue to be around $400 million in the fourth quarter and top $2 billion in 2024, supported by demand for MI300 chips. This, according to the company, would make MI300 its fastest product to reach $1 billion in sales.
Is AMD a Buy, Sell or Hold?
On November 13, Roth MKM analyst Sujeeva De Silva initiated coverage on AMD stock with a price target of $125. The analyst pointed out that AMD’s premium P/E valuation (price-to-earnings multiple based on calendar year 2024 earnings estimates) of 33x, compared to the average P/E of 26x for its general technology peers , reflects the relative growth opportunity of the company. .
De Silva believes that the company’s differentiated portfolio of high-performance computing and network processors and accelerators represents a solid investment opportunity. He added that the company is well positioned from a product portfolio standpoint to address the growing data center infrastructure market. Also, checks from the analyst firm reveal that AMD is poised to gain additional market share in the cloud server and is making progress in the enterprise market.
With 23 Buys and seven Holds, AMD earns Wall Street’s Strong Buy consensus rating. At $127.13, the average price target suggests a modest upside potential of 5.4%. Shares have jumped more than 86% so far in 2023.
Nvidia (NASDAQ:NVDA)
This year has been remarkable for Nvidia. The generative AI-induced demand for the company’s advanced GPUs helped NVDA deliver stellar results in recent quarters and sparked a 237% year-over-year rally in the stock. The company’s GPUs are used by several tech giants to build and train generative AI models.
After the strong performance in the first half of the fiscal year, expectations are high from Nvidia’s fiscal third quarter results, scheduled to be announced on November 21st. Analysts expect the company’s Q3 FY24 earnings to rise 173% year-on-year. of solid Data Center business. This revenue growth estimate reflects further acceleration in NVDA’s top line compared to 101% in Q2 FY24. Wall Street expects adjusted EPS to jump to $3.37 in Q3 FY24 from $0.58 in the previous quarter.
What is NVDA Price Target?
At the recently held Supercomputing 23 event, Nvidia unveiled its HGX H200 AI accelerator, which is an upgrade to the H100. Bank of America analyst Vivek Arya noted that the H200 is compatible with its predecessor H100 facilities, which will facilitate a faster time to market and is actually “critical” because hyperscalers do not need to invest to reconfigure their existing hardware platform to the updated one. proposal
Arya believes that upgrade simplicity enhances the competitive portfolio that Nvidia holds. Calling NVDA his “top pick,” the analyst reiterated a Buy rating on the stock with a price target of $650 on November 13.
Including Arya, 37 analysts have a Buy recommendation for Nvidia while only one analyst has a Hold rating. The average price target of $648.01 implies a 31.5% upside potential.
Intel (NASDAQ:INTC)
Intel shares are up more than 21% over the past month and are up 66% on the year. The company’s better-than-projected third-quarter performance impressed investors. The company’s adjusted EPS increased nearly 11% to $0.41 per share, easily beating analysts’ adjusted EPS estimate of $0.22.
Despite an 8% decline in Q3 2023 revenue to $14.2 billion, adjusted EPS increased due to the company’s spending discipline. After losing market share to rivals such as AMD in recent years, Intel is now focused on improving the competitiveness of its offerings and streamlining its business. The company is also looking to improve its profitability and is aiming for savings of $8 billion to $10 billion by 2025.
What is the Prediction for Intel Stock?
Mizuho analyst Vijay Rakesh recently upgraded Intel shares, citing numerous upcoming server production country and foundry customer announcements. That said, most analysts remain cautious on Intel, including Morgan Stanley analyst Joseph Moore.
In late October, Moore raised his price target for Intel to $39 from $35 and reiterated a Hold rating on the stock. While the analyst acknowledged that Q3 was a good quarter for Intel mainly due to PCs, he believes the “data center malaise” continued in the quarter. Consequently, he kept his two-and-a-half ratings essentially unchanged. While Moore expects the recent results to benefit the stock in the short term, he claims that for Intel the “focus is the roadmap, not numbers.”
Overall, Wall Street’s Hold consensus rating on INTC stock is based on five Buys, 18 Holds and four Sells. The average price target of $37.39 implies a potential downside of 14.6% from current levels.
Conclusion
Analysts are bullish on Advanced Micro Devices and Nvidia, while sidelined on Intel, as many believe there is much more to do for the company to improve its competitiveness in the chip market. Despite the phenomenal year-to-date rally in Nvidia stock, Wall Street continues to see higher potential in the stock than AMD and Intel.
Disclosure
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.