Nvidia (NVDA) shares moved higher again Thursday, pushing the stock past $900 for the first time ever, as analysts continue to reprice the chipmaker amid a surge in AI demand and its commanding market leadership.
Nvidia, now the world's third-largest stock by market value and within touching distance of Apple's $2.6 trillion, smashed Wall Street's elevated fourth quarter earnings estimates last month and forecast 2024 sales in the region of $24 billion and an implied bottom line of $5.41 per share.
Perhaps even more impressive from an investor perspective was the amount of profit Nvidia was able to extract from its chip-making business. Gross-profit margins widened by more than 12 percentage points to 76%, a figure the group says will improve to 77% over the three months ending in April.
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However, while analysts have largely accepted Nvidia's dominance in high-end artificial-intelligence-chip making, they're also starting to see the value of its nascent entry into a new market, which is currently lead by rivals Broadcom (AVGO) and Marvell Technologies (MRVL) .
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Companies that want to develop their own bespoke AI data systems usually need custom-made chips in order to do so. The market for so-called custom silicon, currently pegged at around $10 billion, could double by 2025, according to estimates from industry research group 650 Group.
Custom-made opportunity
Reuters reported last month that Nvidia is looking to enter that market, with a division headed by a former Advanced Micro Devices (AMD) and Marvell executive, Dina McKinney. Nvidia had earlier talks with customers such as Amazon (AMZN) , Meta Platforms (META) and Microsoft (MSFT) , the report said.
The report suggested Nvidia is also exploring the market for custom silicon in wireless telecom chips as well as those in the automotive industry.
Citing the potential for gains in the custom silicon market, Mizuho Securities analyst Vijay Rakesh added $150 to his Nvidia price target, taking it to $1,000 a share, while affirming his buy rating on the stock.
The analyst called Nvidia "the biggest near-term AI winner."
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Rakesh and his team also boosted price targets on two AI market rivals, Broadcom and AMD, taking them to $1,550 and $235 per share respectively.
“We see multiples continuing to expand in the face of the AI rally," Rakesh said. "No change to [estimates] but see potential for outperformance given strong AI demand continues to outpace supply.”
Chipmaking stocks have well outpaced the broader tech sector this year, with the Philadelphia SE Semiconductor index rising 19.7%, nearly triple the 6.8% increase for the benchmark Nasdaq Composite.
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Nvidia shares were marked 4.2% higher in late Thursday trading to change hands at $924.14 each, a move would extend the stock's six-month gain to around 100% and value the group at around $2.3 trillion.
The shares hit a fresh all-time high of $924.98 earlier in the session.
Broadcom shares were marked 3.5% higher at $1,397.56 each while AMD gained 0.95% to $209.68 each.
Micron Technology (MU) , meanwhile, was marked 3.7% higher at $99.11 each following an upgrade to buy from hold at Stifel, and hit an all-time high of $99.96 earlier in the session.
Stifel analyst Brian Chin also boosted his price target on Micron by $40, to $180 a share, noting that "we view tightening conditions in the DRAM market as allowing Micron to better optimize product mix, augmenting cyclical recovery (in profit margins)."
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