As the market re establishes optimism about the growth prospects of the semiconductor industry, the stock prices of both major GPU giants have reached historic highs, with AMD's performance even more impressive than the AI darling Nvidia.
The specific market situation shows that Nvidia closed up 4.17% on Friday at $594.91 per share, setting a new record high closing price on Thursday. Nvidia rose 8.74% this week and currently has a market value close to $1.5 trillion, ranking fifth among US listed companies, behind Microsoft, Apple, Google, and Amazon.
In terms of AMD, the company's stock price closed up 7.11% on Friday at $174.23 per share, with a cumulative increase of 18.8% this week, and its latest market value was $281.46 billion. Driven by chip stocks such as AMD, the Philadelphia Semiconductor Index closed up more than 4% on Friday, and the Nasdaq 100 Index, mainly composed of technology stocks, also reached a new high.
The rise of the US semiconductor sector began on Thursday, when TSMC released its Q4 2023 financial report. Due to strong market demand for products such as HPC, TSMC CEO Wei Zhejia predicts that the company's 3nm revenue will increase by more than three times in 2024, with an overall growth expected to be about 20%. "2024 will be an exciting year for TSMC's growth," he said
At present, the artificial intelligence chip market is mainly dominated by NVIDIA, and the H100 is also recognized as the most needed GPU for training large language models. But David Wagner, portfolio manager at Aptus Capital Advisors, predicts that Nvidia will not be the only winner.
Wagner added that after witnessing Nvidia's outstanding performance over the past year, investors are looking for targets for "catch-up" trading. At the same time, Keyband, Raymond James, and Barclays have adjusted AMD's target price to between $190 and $200, which means analysts believe there is still 8% -14% room for the stock to rise.
Last December, AMD released the new MI300 series AI chips in an attempt to challenge Nvidia's dominant position in the field of artificial intelligence chips. Barclays stated in its report that although Nvidia currently dominates the advanced AI chip market, it is expected to gain some market share this year as AMD delivers more self-produced chips to corporate customers.
Jim Breyer, a well-known investor in Silicon Valley, revealed in a media interview in Davos that he is "aggressively buying" stocks of Nvidia and AMD, and expects AMD to become the next company to enter the "Big Seven". "I don't underestimate Nvidia's leading position, but having a second source of (AI chips) will help solve the difficulties of the ecosystem."
But AMD also carries the risk of overvaluation. According to data, Nvidia's forward P/E ratio is about 28 times, higher than the average of 23 times for semiconductor stocks, while AMD's forward P/E ratio has exceeded 40 times. Alec Young, Chief Investment Strategist at MAPsignals, stated that these stocks have been significantly overvalued, especially AMD.
Young added that AMD needs more evidence to prove its business prospects. According to AMD's press release, the company has scheduled to release its financial performance reports for the fourth quarter and full year of 2023 on January 30th.