NVIDIA shares rose Tuesday as investors shrugged off concerns over a possible new Google chip.
NVIDIA’s stock has climbed about 15% over the past month and now approaches its October record high. This rebound signals that big investors continue to believe in Nvidia’s lead in the AI accelerator market, even as more competitors enter.
Google will unveil a new generation of tensor processing units at its Cloud Next conference. These TPUs are top alternatives to Nvidia’s GPUs for large cloud providers, and some thought the announcement could temporarily challenge Nvidia’s market position.
Investors have shown no signs of worry so far. NVIDIA leaders have repeatedly dismissed custom chips from cloud providers as a major threat, highlighting NVIDIA’s software as a key advantage. A KeyBanc semiconductor analyst maintained an Overweight rating and price target, suggesting about 36% potential upside. The analyst explained, “NVIDIA’s CUDA software creates high switching costs for customers, which helps the company defend its position in both cloud and enterprise AI markets.”
NVIDIA’s upcoming Vera Rubin hardware should keep the company ahead in performance upon launch. Analysts say this will give NVIDIA a continued edge, even though rivals invest heavily in their own chip designs. The next round of earnings reports from big cloud and tech companies should shed more light on AI infrastructure spending, which supports NVIDIA’s current stock price.
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