Nvidia (NVDA) and AMD (AMD) shares fell today, down 6% and 8% respectively, largely due to news about potential competition from Google’s (GOOGL) custom chips. Despite this, Bank of America analyst Vivek Arya maintains a strong long-term outlook for both companies and has reiterated his “buy” recommendation.
Analyst Insights
Arya is recognized as a 5-star Analyst on TipRanks, ranking 203 out of over 10,000 analysts. With a 59% success rate, he averages a 17.4% return per rating each year.
Market Pressure from Google’s TPU
The decline today stems from reports that META is contemplating a major purchase of Google Tensor Processing Units (TPUs) for its data centers starting in 2027. Although nothing is confirmed yet, this news raises concerns about heightened competition between Nvidia and AMD, who currently supply GPUs to Meta’s AI initiatives. It suggests potential changes in the market that could impact sales and pricing power for both companies.
Growth Predictions in AI Market
Arya acknowledges the risks but views them as part of a larger race in AI acceleration that could benefit the entire sector. He forecasts that the AI data center market could expand fivefold, growing from the current $242 billion to about $1.2 trillion by 2030.
For Nvidia, Arya expects the company to maintain its leadership position with roughly 75% market share, which is a slight drop from the current 85%. He mentions that NVIDIA’s stock trades at a forward P/E ratio of around 25 times, indicating that it may still be undervalued, especially with projected sales and earnings per share growth exceeding 40%.
Meanwhile, AMD’s stock trades at a 33x CY26 P/E, reflecting its diverse growth across CPUs, GPUs, embedded systems, and gaming. Arya also mentions Broadcom (AVGO) as another significant player in the space, noting concerns that if Google expands its TPU licensing, it could restrict Broadcom’s market potential.
Comparative Stock Perspectives
To evaluate which AI stocks might be more favorable for investment, we can use the TipRanks stock comparison tool. This allows us to see how analysts rate Nvidia, AMD, Alphabet, Meta, and Broadcom, and which stocks they believe have the most potential for growth.
