Chip giant Nvidia (NASDAQ:NVDA) could be planning a new business unit focused on designing customized chips, including advanced AI chips, according to a Reuters report. The dominant chip designer plans to cater to cloud computing companies and others with this business unit.
The report stated that the company plans to build this business unit to protect itself from rising competition and grab market share for custom AI chips. Reuters cited data from 650 Group’s Alan Weckel, which expects the data center custom chip market to be worth $10 billion this year, rising to $20 billion by next year.
Currently, Nvidia dominates 80% of the high-end AI chip market, and its generalized, all-purpose AI chips, H100 and A100, serve major tech companies. However, many of these tech companies are developing these chips internally for their customized processes to reduce energy consumption and lower the costs and time required to design such chips. According to the report, Nvidia has already discussed these custom chips with tech giants like Microsoft (MSFT) and Google (GOOGL).
What Is the Price Target for Nvidia?
Analysts remain bullish about Nvidia with a Strong Buy consensus rating based on 34 Buys and four Holds. Over the past year, NVDA stock has skyrocketed by more than 200%, and the average NVDA price target of $687.09 implies a downside potential of 1.3% at current levels.
