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Surge in Nvidia and AMD Stocks Fueled by Optimism Over Rising Demand for AI Chips; Price Targets Raised by Analysts

Investor optimism regarding increased demand for artificial intelligence (AI)-powered chips has driven shares of Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) higher. Nvidia maintains a dominant position in advanced AI chips, while AMD is expected to make gains this year, particularly in deliveries to enterprise customers, according to Barclays analysts led by Tom O’Malley.

Nvidia’s stock saw a 3% increase, reaching $563.65 and hitting a new record high. Meanwhile, AMD experienced a surge of 7.5%, reaching $157.57, marking its highest level in over two years. Nvidia’s shares more than tripled last year, securing its position as the world’s most valuable chipmaker, while AMD’s shares more than doubled.

Barclays raised the price target for AMD shares to $200 from $120, and KeyBanc analysts increased theirs to $195 from $170. KeyBanc also raised Nvidia’s price target to $740 from $650. Both Nvidia and AMD are among the top gainers in the industry-wide PHLX semiconductor index, which rose by 1.15% during the session.

Currently, the median price target for Nvidia, as indicated by the 53 analysts covering its stock, is $625, slightly down from $627.50 a month ago. The collective recommendation remains “buy.” For AMD, the 47 analysts covering its shares have a median price target of $145, up from $130 a month ago, with a collective recommendation to buy the stock, according to LSEG Data.

Nvidia’s plans to initiate mass production later this year for an AI chip designed for Chinese customers to comply with tightened U.S. export rules were reported by Reuters earlier this month. In December, AMD announced two new AI data center chips as part of its strategy to challenge Nvidia’s flagship microprocessors.