Nvidia shares moved higher in early Wednesday trading, following an extended slump into correction territory by the world’s leading AI chipmaker, following a bullish market outlook from a top Wall Street analyst.
Nvidia (NVDA) has underperformed by the broader tech market and its chipmaking peers over the past five weeks, falling more than 12.4% since reaching their all-time high of $148.88 on November 7.
Some analyst have pointed to the gains for rivals such as Broadcom (AVGO) and Marvell Technology (MRVL) , which have taken increasing share of the market for custom-made ASCI chips, as evidence of increasing competition for Nvidia in the broader AI space.
ASIC chips help giant providers of cloud networking infrastructure and services like Alphabet (GOOGL) and Meta Platforms (META) boost the speed and reliability with which they process information.
Nvidia shares have lost more than $400 billion in market value since Election Day, and have fallen more than 12% from their all-time peak on November 7.
Broadcom shares have gained more than 45% over the past month alone, and have risen past the $1 trillion threshold in terms of market value, and posted stronger-than-expected fourth quarter earnings last week.
Custom chip challenge
Broadcom CEO Hock Tan, in fact, told investors on a conference call late Thursday that the group’s potential market for both its networking and ASIC offerings could rise to $90 billion over the next two years.
Marvel, which is up 26.5% over the past month and more than 92% for the year, posted Street-beating earnings on December 4 that included a record $1.1 billion in data center revenues and a robust near-term outlook.
Citigroup analyst Atif Malik, however, expects Nvidia to hold its commanding market share well into the coming years.
Related: Analysts overhaul Broadcom stock price targets after Q4 earnings
Malik, who reiterated his ‘buy’ rating and $175 price target on Nvidia in a note published Wednesday, sees the market for AI accelerators rising to a staggering $380 billion by 2028, “with AI GPUs representing 75% of share and ASIC representing 25%.”
“Recent custom ASIC chipmakers’ Marvel and Broadcom strong results are stirring up new investor questions on the old ‘GPU vs Custom ASIC’ debate,” Malik and his team wrote.
“As highlighted in our recent report, we expect both to coexist with the software reprogrammability to different workloads through CUDA being the biggest advantage for GPUs/Nvidia,” they added.
Supply chain improvements
CUDA, an acronym for compute unified device architecture, allows developers to use the powerful AI processors in more general-purpose computing.
Malik also suggests that some of Nvidia’s recent supply chain issues, including capacity restraints at Taiwan Semiconductor linked to its high-end chip-on-wafer-on-substrate, or CoWoS, a crucial component of AI-chip making, will improve in the coming year.
“Our recent supply chain discussions indicate Nvidia’s CoWoS foundry capacity allocation is expected to grow to 60% in 2025 from 56% in 2024, pointing to continued GPU momentum in 2025,” Malik and his team said.
Related: Nvidia stock hits correction territory, but bulls see value in AI leader
Nvidia will likely continue to gather a commanding share of AI-related revenues over the coming year, compared to its custom-chip rivals, according to figures from a quarterly investor survey published by Cantor Fitzgerald.
The survey showed around a third of respondents see Broadcom’s AI revenues rising to $17 billion over its current financial year, which ends in September. A similar percentage sees Marvell generating between $3 billion and $4 billion.
More AI Stocks:
Top analyst revisits Micron stock price target ahead of Q1 earningsAnalysts revamp Ciena stock price target after AI outlookCathie Wood buys $30 million of under-the-radar AI stock
Nvidia, which guides investors on revenue and profit forecasts for only the coming quarter, sees an end-January revenue tally of $37.5 billion, with analysts pegging its data center total for fiscal 2025 at $113.36 billion.
In terms of its Blackwell processors alone, Wall Street analysts expect “several billions” in revenues over Nvidia’s fourth quarter, with totals of $62 billion in 2025 and $97 billion in 2026.
Nvidia shares were last marked 2.6% higher in premarket trading to indicate an opening bell price of $133.75 each.
Related: Veteran fund manager delivers alarming S&P 500 forecast
