Nvidia AI Chip Partnership Adds Fuel to MediaTek’s Share Rally
(Bloomberg) — An expanded partnership with Nvidia Corp. has fueled investor optimism about the growth potential of MediaTek Inc.’s AI, sending its shares to their first record high in seven months.
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Shares rallied from a June high this week after the Taiwanese chip designer announced a tie-up with Nvidia for an AI personal computer chip. In addition to the companies’ existing partnership in automotive technology, the news boosted expectations for further gains in the stock after when they more than doubled in the last two years.
Better known for its key role in phone supply chains, MediaTek is also now “very well positioned for the development of artificial intelligence technologies,” said Robert Mumford, investment manager at Gam Hong Kong Limited’s projects with Nvidia and expectations for more to come show that “MediaTek has great opportunities for a diversified business,” he added.
MediaTek is also benefiting from an improved outlook for smartphone chips, which still make up more than half of its revenue, which helped push the consensus estimate for MediaTek’s December quarter sales by about 5% over the past few months, Bloomberg shows. data compiled by
While the new PC chip is expected to do little in terms of short-term sales given its niche customer base, overall hopes for the company’s AI business are high. Much of the excitement is about integrated circuits for data centers ( ASIC) with potential.
MediaTek’s expertise in low-power processors, Wi-Fi and multimedia “complements Nvidia’s capabilities well,” BofA Securities analysts, including Brad Lin, wrote in a note that MediaTek is expanding into a wider market together with Nvidia.”
Bears have retreated on the stock, with no sell ratings since May.Analysts have been quick to follow the rally, which has raised the average price target by 47% over the past year.
Reflecting the bullish sentiment, the stock currently trades at 20 times forward earnings, a five-year average of 16. That’s more expensive than the 19 times for parent Taiwan Semiconductor Manufacturing Co., but it pales next to the 30+ multiple. , such as Nvidia and Broadcom Inc.
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