Nvidia appeared to come under pressure Monday from a report that ChatGPT creator OpenAI is pushing ahead with plans to develop its own AI chips to reduce its reliance on Nvidia processors for artificial intelligence applications. But Nvidia stock rallied despite the news.
OpenAI plans to finalize the design for its first in-house chip in the next few months, Reuters reported. Taiwan Semiconductor Manufacturing is set to make the AI chip using its 3-nanometer process technology. OpenAI wants to mass produce the chips at TSMC in 2026, Reuters said.
Nvidia stock has traded lower in recent weeks after China's DeepSeek announced a low-cost AI computing system. That news caused investors to question whether hyperscale cloud computing providers would pause their costly AI data center buildouts.
But Google parent Alphabet, Amazon.com, Facebook parent Meta Platforms and Microsoft have reiterated their commitments to increase their capex.
Meanwhile, Evercore ISI analyst Mark Lipacis on Sunday added a "tactical outperform" rating to Nvidia stock ahead of the company's fiscal fourth-quarter earnings report. Nvidia is scheduled to post its fiscal Q4 results on Feb. 26.
Lipacis said his firm's channel checks are constituent with its bullish long-term thesis. He expects a positive report and outlook from the company. Lipacis has a price target on Nvidia stock of 190.
On the stock market today, Nvidia stock rose 2.9% to close at 133.57.
Nvidia Stock On Tech Leaders List
Other semiconductor stocks moving on news Monday included TSMC, NXP Semiconductors, Onsemi and Semtech.
TSMC warned that its first-quarter revenue will be at the lower end of its prior forecast range due to the impact from a recent earthquake and aftershocks. However, it reiterated its full-year outlook. TSM stock rose 0.9% to close at 207.95 on Monday.
NXP announced an agreement to buy Kinara, a maker of high-performance, energy-efficient and programmable discrete neural processing units. Those NPUs will enable a wide range of edge AI applications, NXP said. The $307 million all-cash deal is expected to close in the first half of 2025. NXP stock fell 1.4% to 210.05.
Onsemi stock dropped 8.2% to 47.04 after the chipmaker delivered disappointing fourth-quarter results and guidance. The maker of chips for automotive and industrial applications missed its sales and earnings targets for Q4 and guided well below views for the current quarter.
Semtech stock plunged 31% to 37.60 on Monday after it revealed late Friday in a regulatory filing that sales of its CopperEdge products will be lower than previously anticipated. CopperEdge products are used in active copper cables for data center applications. Piper Sandler said the lower sales estimate suggests a change in rack architecture at Nvidia.
Nvidia and TSMC are on the IBD Tech Leaders stock list.
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