Nvidia Stock Rises. Why This Analyst Says Broadcom’s AI Chip Threat Is No Big Deal.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Nvidia was rising Tuesday after the artificial-intelligence chip maker managed to brush off concerns about competition.

Nvidia shares were up 0.1% at $168.54 in early trading. The stock rose 0.8% on Monday but is still down 8% over the past month.

Nvidia has been hit by competition concerns. Last week Broadcom , which posted its earnings, said it expects its clients to make more use of its hardware in the future – and that would be at the expense of Nvidia’s graphics-processing units.

However, Nvidia to likely to remain the leader in AI processors, and Wall Street analysts are generally backing it even if it loses some of the rough 90% market share it owns. Nvidia has a key advantage, which is that developers are familiar with its CUDA software. That could reduce the chance customers switch to other hardware, such as Google’s Tensor Processing Units, which the search company developed with Broadcom.

“With significant barriers to entry created by its CUDA software stack, we see limited competitive risks and expect Nvidia to continue to dominate one of the fastest-growing workloads in cloud and enterprise,” wrote KeyBanc analyst John Vinh in a research note on Monday.

Vinh kept an Overweight rating and price target of $230 on Nvidia stock and said both it and Broadcom are among his top picks in semiconductor stocks.

Elsewhere, Nvidia participated in a €1.7 billion ($2 billion) funding round for Mistral AI which was led by chipmaking equipment company ASML Holding. The French artificial-intelligence start-up said Tuesday it is now valued at about $13.8 billion.

Among other chip makers, Advanced Micro Devices was rising 1% and Broadcom was down 0.5% in morning trading.

Write to Adam Clark at adam.clark@barrons.com