Nvidia stock rating reiterated at Outperform by Bernstein amid Intel deal

Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on Nvidia (NASDAQ:NVDA) with a price target of $225.00, following the chipmaker’s recent investment in Intel. The semiconductor giant, currently trading at $176.24 with a market capitalization of $4.28 trillion, continues to demonstrate its market dominance. According to InvestingPro data, Nvidia maintains excellent financial health with strong growth metrics.

The research firm suggests that Nvidia’s $5 billion investment in Intel does not indicate a shift away from Taiwan Semiconductor Manufacturing Company (TSMC) as its preferred chip manufacturing partner. Bernstein believes the deal may have been influenced by pressure from the U.S. government. This strategic move comes as Nvidia demonstrates remarkable financial performance, with revenue growth of 71.55% and an impressive return on equity of 109%.

The investment appears strategic for Nvidia, with Bernstein noting that Intel is actually a competitor to Nvidia, as "Nvidia wants to enter CPU and Intel wants to enter AI market." The firm interprets Nvidia’s decision to invest in Intel rather than commit to using Intel Foundry as confirmation that "TSMC is still the choice of Nvidia even under the pressure."

For Intel, Bernstein observes that the company "appears to be entering this deal from a position of weakness rather than strength," adding that the agreement "does nothing to strengthen the manufacturing story." The firm remains neutral on Intel stock.

Regarding Nvidia, Bernstein maintains its bullish stance, stating the company is "clearly flexing their muscles" and "got a good deal on their investment," which is reportedly "already up over a billion dollars." This view aligns with the broader analyst consensus, as tracked by InvestingPro, which shows strong bullish sentiment. For deeper insights into Nvidia’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, available alongside 20+ additional ProTips for this stock.

In other recent news, Nvidia has committed £2 billion ($2.71 billion) to support artificial intelligence startups in the United Kingdom. This investment is intended to accelerate job creation and business development, with several venture capital firms, including Accel and Balderton, joining the initiative. Additionally, Nvidia has signed a letter of intent to potentially invest $500 million in the British autonomous driving technology company Wayve’s upcoming funding round. This move highlights Nvidia’s focus on expanding its presence in the UK technology sector. In a related development, Samsung Electronics has successfully passed Nvidia’s qualification test for its 12-layer HBM3E chip. This approval comes approximately 18 months after Samsung completed the development of the chip, according to a report from Korea Economic Daily. These developments reflect ongoing strategic investments and collaborations by Nvidia and Samsung in the technology and AI sectors.

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