Nvidia (NVDA) and AMD (AMD) shares are down 6% and 8%, respectively, today, due to reports of potential competition from Google’s (GOOGL) custom chips. Yet Bank of America analyst Vivek Arya sees a strong long-term outlook for both GPU makers, reiterating a Buy rating.
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It is worth noting that Arya is a five-star analyst on TipRanks, ranking 203 out of more than 10,000 analysts. He has a success rate of 59%, with an average return per rating of 17.4% over a one-year timeframe.
Market Pressure from Google’s TPUs
The key driver for today’s decline is a report from The Information that Meta (META) is considering buying “billions of dollars” worth of Google’s Tensor Processing Units (TPUs) for its data centers, beginning in 2027.
While no deal has been confirmed, the news fuels concerns about growing competition for Nvidia and AMD, which supply GPUs to Meta’s AI operations. It also signals a possible market shift that could pressure both sales and pricing power.
Analyst Sees AI Market Soaring
Arya noted the risk but sees it as part of a broader AI accelerator race that benefits the entire sector. He expects the AI data center market to grow fivefold by 2030, reaching about $1.2 trillion, up from $242 billion today.
Regarding Nvidia, Arya expects the chipmaker to maintain its leadership, with market share around 75%, down slightly from the current estimate of 85%.
Also, he noted that Nvidia stock trades at about 25x forward earnings. He believes the stock is still undervalued, given expectations of more than 40% growth in sales and earnings per share.
Meanwhile, Arya said AMD stock trades at 33x CY26 PE, which reflects its diversified growth drivers across CPUs, GPUs, embedded, and gaming.
The analyst also pointed to Broadcom (AVGO) as another key player. Arya expects over 100% AI sales growth in 2026 thanks to additional TPU and Anthropic (PC:ANTPQ) projects. However, he cautioned that Google licensing more TPUs could limit Broadcom’s total addressable market.
Which AI Stock Is a Better Buy?
We use the TipRanks Stock Comparison tool to see how Wall Street analysts are rating Nvidia, AMD, Alphabet, Meta, and Broadcom, and which AI stock they believe has the strongest upside.
