What's Going On With Nvidia, AMD Stock Tuesday?

Nvidia Corp NVDA trades higher as it continues to rule the AI game. In contrast, Advanced Micro Devices, Inc AMD trades lower after KeyBanc re-rated the stocks amid reports of AMD's delays of its MI300 AI server and stability issues with its PC NB Ryzen Phoenix (7040).

Analyst John Vinh maintains Nvidia with Overweight, raising the price target from $500 to $550. 

Fundamentally best positioned, he saw increasing demand trends across the entire supply chain for generative AI servers. 

Robust demand is coming from the cloud, enterprises, and AI startups. 

Delays associated with AMD's MI300 are likely to free up incremental capacity in the second half of FY23. At the same time, he believes NVDA has secured enough capacity (CoWoS) to quadruple its data center revenues in 2024. Therefore, the analyst raised his estimates and price target. 

Vinh reiterates AMD with an Overweight and raises the price target from $150 to $160.

While near-term challenges associated with delays of its MI300 AI server and stability issues with its PC NB Ryzen Phoenix (7040) could result in a near-term risk to estimates, AI server wins at Hewlett Packard Enterprise Co HPE/El Capitan, Microsoft Corp MSFT, and Meta Platforms, Inc META gave the analyst high conviction that AMD could see well over $2 billion in AI revenues in 2024. Thus, the analyst raised his estimates and price target.

Feedback from Asia indicated limited signs of recovery or optimism regarding China, as booking trends remained weak throughout the quarter and were generally more vulnerable than expected. 

Accordingly, the analyst continued to observe rush order activity throughout the supply chain as customers remained hesitant about placing orders into the backlog and took advantage of standard lead times and excess inventory. 

Vinh heard that "channel stuffing" behavior has eased, allowing the inventory destocking process to progress. 

In terms of end markets, PCs, smartphones, and consumer electronics all appear to be tracking weaker than expected. Conversely, automotive, particularly EV, remains strong (China ICE auto remains weak), while industrial commentary indicates demand remains relatively resilient. 

Not surprisingly, AI server demand has consistently been highlighted as a source of strength but appears to be cannibalizing demand for traditional servers. 

Price Actions: NVDA shares traded higher by 0.42% at $423.58 on the last check Tuesday. AMD shares traded lower by 2.83% at $110.36.

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