The Ratings Game: Nvidia is the only near-term ‘beat and raise’ chip maker when it comes to AI, analyst says

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Nvidia Corp. will be the only chip maker positioned to exceed Wall Street expectations in the near term when it comes to servicing the wildly growing artificial-intelligence market, according to one analyst.

On Friday, Morgan Stanley chip analyst Joseph Moore switched his “top pick” stock to Nvidia NVDA, +0.09% from Advanced Micro Devices Inc. AMD, -3.35% on the basis that Nvidia was better positioned to make money in the near term.

While Moore maintained his overweight rating on AMD, he said “only one company is in a position to beat and raise this year,” and that was Nvidia.

“Unlike Nvidia, though, the company is unlikely to post near term upside,” Moore said of AMD. This past week, AMD launched a slew of AI hardware products, similar to Nvidia’s late March launch.

Read: AMD launches new data-center AI chips, software to go up against Nvidia and Intel

Shares of Nvidia rose 0.1% to finish Friday at $ 426.92, for a weekly gain of 10.1%, while AMD shares fell 3.4% to close at $ 120.08, for a weekly loss of 3.9% during AMD’s AI data-center product launch during the week.

“Frankly, the commentary around these markets is more positive than anything we have heard in 29 years of covering semiconductor stocks,” Moore said of AI. “Even at a level of $ 40 billion in data center revenue next year, we see the potential for the data center business to grow to over $ 56 billion by [fiscal year 2028/calendar year 2027].”

Read: AMD, Nvidia face ‘tight’ budgets from cloud-service providers even as AI grows

“The factor driving numbers higher faster seems to be the number of customers,” Moore said of Nvidia. “Our initial analysis had contemplated 20 or so full scale large language models, which means that revenue growth would come from increasing model complexity, extensions of those models for vertical markets, language translations, and real time retraining, which we thought would drive training to $ 32 billion by [calendar year 2027].”

Read: ‘Unprecedented’ and ‘unfathomable.’ Nvidia makes jaws drop on Wall Street as stock explodes higher.

Moore hiked his price target on Nvidia to $ 500 from $ 450 and raised his target on AMD to $ 138 from $ 97. The analyst also raised his price target on Marvell Technology Inc. MRVL, -1.47% to $ 68 from $ 55.

Year to date, Nvidia’s share price has nearly tripled, and in mid-June Nvidia became the seventh public U.S. company — and the first U.S. chip maker — to surpass $ 1 trillion in market capitalization.

Meanwhile, AMD’s AMD, -3.35% stock has gained 85.4% on the year. Those are followed by Marvell’s with a 65% gain and Broadcom Inc.’s AVGO, -1.73% 55.3% gain.

Intel Corp. INTC, +1.54% shares — which scored their best week in 14 years — have risen 37.6%, compared with a 45.1% rally on the PHLX Semiconductor Index SOX, -0.94%, a 14.9% gain on the S&P 500 SPX, -0.37%, a 30.8% surge on the Nasdaq Composite COMP, -0.68%, and a 3.8% rise on the Dow Jones Industrial Average DJIA, -0.32%.