TD Cowen’s top analyst, Krish Sankar, shared his views on Nvidia’s (NVDA) $5 billion investment in Intel (INTC) and their partnership aimed at building custom CPUs (central processing units) and new chip platforms. Sankar stated that the deal will have long-term implications for contract manufacturer Taiwan Semiconductor (TSM) and chip designer Arm Holdings (ARM).
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While near-term effects may be modest, the partnership highlights rising competition in chip manufacturing and innovation. This is largely driven by growing demand for artificial intelligence (AI) and custom computing, with the semiconductor market expected to grow by 11% this year.
Sankar’s Ratings and Price Targets
Sankar has a “Hold” rating on TSM stock with a $250 price target, implying 6.9% downside potential. Conversely, he rates ARM as a “Buy” with a $175 price target, which implies 19.4% upside in the next twelve months.
Sankar is a five-star analyst on TipRanks, ranking #208 out of 10,026 analysts tracked. He has a 61% success rate and an average return per rating of 20.80%.
TSMC Could Risk Losing Nvidia to Intel’s Foundry
Regarding Taiwan Semiconductor, Sankar noted that there is no near-term risk to Nvidia’s wafer demand at TSMC. However, Nvidia’s partnership with Intel could pose a longer-term risk since Nvidia has shown interest in using Intel Foundry technology.
On the server side, adding NVLink to Intel’s x86 processors may have mixed effects for TSMC, depending on how much market share Intel can gain and how much new AI accelerator demand it creates.
ARM Will See Mixed Outcomes from the Deal
Sankar believes that Arm will see mixed outcomes from the deal, with little direct impact on its market or financials. He views potential risks as being more sentiment-driven among investors rather than based on fundamentals in the near to medium term.
He also believes that Nvidia’s Arm-based chips, like Grace and the upcoming Vera, have already gained share through their use in AI rack-scale systems. Meanwhile, Arm’s custom processors and accelerators developed by other cloud providers and AI companies remain major growth drivers for the company.
Sankar pointed out that Arm’s adoption is slowed by Intel’s x86 dominance and large software ecosystem. Still, he expects Nvidia to keep investing in Arm-based processors, where it can fine-tune the architecture to optimize AI infrastructure.
Which Is the Best Semiconductor Stock, According to Analysts?
We used the TipRanks Stock Comparison Tool to determine which among the four semiconductor stocks is most preferred by analysts.
Currently, Wall Street has a “Strong Buy” consensus rating on ARM, Taiwan Semi, and Nvidia shares, with NVDA offering the highest upside potential among them.
