NVIDIA (NVDA), AMD (AMD) Price Targets Raised at MKM Partners on Inflecting Semi Opportunities
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Ing sees advantages to NVIDIA in a crowded A.I. field. "Other suppliers may be able to come up with better performance-for-power in certain use cases. However, NVDA GPUs still have user stickiness with developer incumbency and easy-to-use tools (including the CUDA language) that will be difficult to overcome. This applies largely to “training” of neural networks, plus also “inferencing” as networks are deployed," the analyst commented.
For AMD, they are raising the EV/Sales multiple. "We think the higher multiple (was 1.53x) reflects improved prospects for the company driven by the new product pipeline, including Zen server and Vega GPUs. It is also the historical EV/Sales multiple in the 2006 timeframe, when AMD fundamentals were last considered strong," the analyst said. Ing also noted Zen validation is on track. "Investors are looking for industry validation on the Zen workstation and server opportunity. We think the achievable milestones in the coming months will be: (1) seeing major OEM customers announcing Zen-based product, (2) third party performance benchmarking reporting that Zen is competitive, and (3) understanding which D-C workloads Zen may be advantaged in and which INTC has overlooked/underserved. We think plain vanilla long-onlys are doing work on the name now but are awaiting greater signs of industry validation."
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