Nvidia Stock Rises. Will Competition Be a Killer?

Nvidia chips are the favored choice for training artificial-intelligence models. (Akio Kon/Bloomberg)

Key Points

• Nvidia shares rose 2.4% in premarket trading, recovering from a 4.4% drop the previous day.
• Oppenheimer maintained an Outperform rating and $225 target price on Nvidia, citing superior AI performance.
• Nscale Global Holdings will deploy 116,600 Nvidia GPUs for AI infrastructure with Microsoft.

Nvidia stock was rising ahead of the open Wednesday as investors moved past competition concerns and focused on demand for its artificial-intelligence chips.

Nvidia stock was up 2.6% at $184.73 in premarket trading after falling 4.4% on Tuesday. S&P 500 futures were up 0.7%, while Dow Jones Industrial Average futures had risen 0.5%, and Nasdaq Composite futures had gained 0.9%.

The previous day’s drop came following a deal between rival chip company Advanced Micro Devices and cloud company Oracle, suggesting Nvidia could face increased competition in the AI processor market in future.

However, Oppenheimer analyst Rick Schafer wrote in a research note Wednesday that Nvidia remains one of his top picks in the semiconductor sector, citing its superior performance-per-watt for AI workloads. He has an Outperform rating and $225 target price on Nvidia shares.

Nvidia’s currently available GB200 NVL72 AI server outperformed AMD’s offerings for performance and efficiency in the newly-released SemiAnalysis InferenceMAX benchmarks. Inference is the process of generating answers from AI models.

Further signs of demand for Nvidia’s hardware continue to come in the wider market.

U.K.-based Nscale Global Holdings said Wednesday it would deploy a total of 116,600 Nvidia graphics-processing units across sites in Texas and Portugal, as part of an AI infrastructure agreement with Microsoft.

Among other chip makers, Advanced Micro Devices was rising 2.6% and Broadcom was gaining 2.4% in premarket trading.

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