Nvidia stock rises as DA Davidson reiterates Buy rating on Intel deal

Investing.com - Nvidia (NASDAQ:NVDA) stock gained after DA Davidson reiterated its Buy rating and $210.00 price target following the company’s collaboration announcement with Intel. The semiconductor industry continues to show strong momentum, with key players like AMD trading at high earnings multiples, reflecting the sector’s growth potential. InvestingPro offers comprehensive analysis of semiconductor stocks, including detailed valuation metrics and growth forecasts.

Nvidia and Intel revealed a multi-generation partnership to develop custom data center and PC products, with Nvidia making a $5 billion investment in Intel common stock. This strategic move comes as semiconductor companies maintain strong financial positions, with industry peers like AMD showing robust current ratios of 2.49 and moderate debt levels.

DA Davidson views the announcements as strategic wins for both companies, with Nvidia accelerating momentum in the AI ecosystem while supporting "the only viable leading-edge domestic foundry."

The firm believes Nvidia’s investment in Intel demonstrates its dominant position in the AI ecosystem, noting that while Intel may have been viewed as a meaningful competitor in the past, "that is no longer the case and hasn’t been for quite a while."

Nvidia’s motivation includes diversifying CPU options beyond its Arm-based solution manufactured by TSMC, while aligning with US government efforts to strengthen domestic semiconductor capacity.

In other recent news, Intel has announced a significant development with Nvidia taking a 4.9% stake in the company, investing $5 billion at $23.28 per share. This strategic partnership involves Intel building custom x86 CPUs for Nvidia’s AI infrastructure, while Nvidia will integrate its NVLink technology into the CPU-GPU platform. The collaboration aims to enhance AI solutions through joint go-to-market strategies. Meanwhile, AMD has been in the spotlight with mixed analyst reviews. Piper Sandler has reiterated its Overweight rating on AMD, citing optimism in GPU prospects through 2025 and 2026. However, Erste Group has downgraded AMD from Buy to Hold due to concerns over operating margins and valuation, noting that recent EBIT margins have been below the sector average. Additionally, HSBC has adjusted its price target for AMD to $185 from $200, maintaining a Buy rating, based on revised assumptions about the pricing of AMD’s MI355 chip. These developments reflect ongoing shifts and strategic moves within the semiconductor industry.

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