Missed the Nvidia rally? These 10 companies are buying its chips — and their stocks are rallying
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 07 2024
0mins
Should l Buy MSFT?
Source: CNBC
- Nvidia Stock Surge: Nvidia's stock has risen by 280% in the past year due to increased sales of chips for AI applications.
- Investor Interest in AI Companies: Investors are also investing in companies that purchase Nvidia's chips, expecting AI to enhance productivity and profits.
- Correlation with Nvidia: Companies like Super Micro, Tokyo Electron Device, Meta Platforms, Tata Motors, and Mitsui have seen significant gains as their stock prices correlate closely with Nvidia's.
- Key Customers: Microsoft is Nvidia's top customer for AI chips, while TSMC is its primary chip manufacturer. Meta and Super Micro are also major customers.
- Tokyo Electron Device and Mitsui: Tokyo Electron Device distributes Nvidia's chips in Japan, while Mitsui is developing a supercomputer powered by Nvidia GPUs for generative AI in pharmaceuticals.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 401.140
Low
500.00
Averages
631.36
High
678.00
Current: 401.140
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Overall Performance: Microsoft's total revenue increased by 17% year-over-year to $81.3 billion, with its Productivity and Business Processes division growing by 16% and consumer cloud revenue rising by 29%, demonstrating excellent performance across its customer base and the positive impact of AI feature integration on business growth.
- Opportunity in OpenAI Investment: Microsoft holds a 27% stake in OpenAI, and while OpenAI's contribution to Microsoft's overall business is limited, investing in Microsoft provides indirect exposure to generative AI, enhancing the attractiveness of Microsoft stock for investors.
- Attractive Valuation for Investment: Microsoft's current operating price-to-earnings ratio is near its lowest levels since 2020, and despite trading at a premium in the past, this valuation correction presents a compelling buying opportunity for investors, with significant upside potential expected over the next few years.
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- Product Update Plans: Altman also mentioned that OpenAI plans to release an updated chat model this week, and its AI coding tool Codex has grown by about 50% in the past week, which will further enhance its product competitiveness.
- Ad Testing Launch: OpenAI is set to begin testing ads in ChatGPT today, facing criticism from competitor Anthropic; Altman emphasized the goal of making AI accessible to a broad user base that cannot afford subscription fees.
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- Annual Recurring Revenue Surge: The company's annual recurring revenue (ARR) jumped 20% to nearly $2 billion, indicating a sustained demand for its AI analytics and automation solutions, which enhances the long-term revenue stability of the business.
- Upgraded Earnings Forecast: Management raised its full-year adjusted earnings per share guidance to $1.67 to $1.69, up from a prior forecast of $1.62 to $1.64, reflecting confidence in future performance and boosting investor sentiment.
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- Annual Recurring Revenue Surge: The company's annual recurring revenue (ARR) jumped 20% to nearly $2 billion, demonstrating success in attracting customers and expanding market share, particularly in cloud computing and AI integration.
- Shareholder Return Initiative: Dynatrace announced a new $1 billion share repurchase program, reflecting its strong cash flow and financial health, aimed at boosting shareholder confidence while investing for long-term growth.
- Upward Earnings Guidance: The company raised its full-year adjusted earnings per share forecast to $1.67 to $1.69, exceeding market expectations, which further enhances investor sentiment and confidence in future performance.
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- TSMC Investment Commitment: Taiwan Semiconductor Manufacturing Company (TSMC) has pledged to invest $165 billion to expand its manufacturing capabilities in the U.S., which is part of the tariff exemption framework and could help the U.S. reduce reliance on foreign chip production while enhancing its competitiveness in the global semiconductor market.
- Trade Agreement Impact: Under a U.S.-Taiwan trade agreement, Taiwanese firms building semiconductor plants in the U.S. would be allowed to import chips tariff-free in proportion to their planned domestic capacity, enabling TSMC to pass these exemptions on to its U.S. customers, thereby lowering operational costs.
- Ongoing Policy Review: While the exemptions provide some relief, administration officials stress that the plan is still evolving to ensure it does not become a
See More
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- Earnings Report Disappointment: Although Microsoft's second-quarter revenue reached $81.3 billion, a 17% year-over-year increase, the cloud business Azure's growth rate of 39% fell short of analyst expectations, indicating potential slowdowns that could shake investor confidence.
- AI Business Potential: CEO Satya Nadella highlighted the rapid growth of Microsoft's AI business, which has become larger than some of its major franchises, suggesting that despite the slowdown in cloud growth, there are still significant opportunities in AI that could drive future growth.
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See More
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- Azure Revenue Growth: Microsoft's Azure cloud computing business has achieved a year-over-year growth rate of 39%, indicating strong demand for its computing resources, which further solidifies Microsoft's market position in the AI era and is expected to drive future revenue growth.
- Strong Overall Performance: Microsoft's total revenue increased by 17% year-over-year to $81.3 billion, with its Productivity and Business Processes division growing by 16% and consumer cloud revenue rising by 29%, demonstrating excellent performance across its customer base and the positive impact of AI feature integration on business growth.
- Opportunity in OpenAI Investment: Microsoft holds a 27% stake in OpenAI, and while OpenAI's contribution to Microsoft's overall business is limited, investing in Microsoft provides indirect exposure to generative AI, enhancing the attractiveness of Microsoft stock for investors.
- Attractive Valuation for Investment: Microsoft's current operating price-to-earnings ratio is near its lowest levels since 2020, and despite trading at a premium in the past, this valuation correction presents a compelling buying opportunity for investors, with significant upside potential expected over the next few years.
See More
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- Significant User Growth: OpenAI CEO Sam Altman revealed in an internal message that ChatGPT is experiencing over 10% monthly growth, with approximately 800 million weekly active users, demonstrating strong appeal despite fierce competition in the market.
- Product Update Plans: Altman also mentioned that OpenAI plans to release an updated chat model this week, and its AI coding tool Codex has grown by about 50% in the past week, which will further enhance its product competitiveness.
- Ad Testing Launch: OpenAI is set to begin testing ads in ChatGPT today, facing criticism from competitor Anthropic; Altman emphasized the goal of making AI accessible to a broad user base that cannot afford subscription fees.
- Market Valuation Surge: OpenAI's valuation is expected to soar above $800 billion, while Anthropic's latest funding round could elevate its valuation to $350 billion, indicating strong growth potential for both companies in the AI sector.
See More
Dynatrace Reports Strong Earnings, Shares Rise 7.52%
- Significant Revenue Growth: Dynatrace reported an 18% year-over-year revenue increase to $515 million in its fiscal Q3 2026, demonstrating strong performance in the enterprise market and solidifying its position in the AI-driven observability platform sector.
- Annual Recurring Revenue Surge: The company's annual recurring revenue (ARR) jumped 20% to nearly $2 billion, indicating a sustained demand for its AI analytics and automation solutions, which enhances the long-term revenue stability of the business.
- Upgraded Earnings Forecast: Management raised its full-year adjusted earnings per share guidance to $1.67 to $1.69, up from a prior forecast of $1.62 to $1.64, reflecting confidence in future performance and boosting investor sentiment.
- Share Repurchase Program Announced: Dynatrace unveiled a new $1 billion share repurchase program, signaling its commitment to creating long-term value for shareholders while leveraging strong cash flow to support sustainable growth initiatives.
See More
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- Strong Financial Performance: Dynatrace reported an 18% year-over-year revenue increase to $515 million in its fiscal 2026 third quarter, indicating robust demand for its AI-powered observability platform and solidifying its market position.
- Annual Recurring Revenue Surge: The company's annual recurring revenue (ARR) jumped 20% to nearly $2 billion, demonstrating success in attracting customers and expanding market share, particularly in cloud computing and AI integration.
- Shareholder Return Initiative: Dynatrace announced a new $1 billion share repurchase program, reflecting its strong cash flow and financial health, aimed at boosting shareholder confidence while investing for long-term growth.
- Upward Earnings Guidance: The company raised its full-year adjusted earnings per share forecast to $1.67 to $1.69, exceeding market expectations, which further enhances investor sentiment and confidence in future performance.
See More
Trump Administration Considers New Tariffs on Semiconductors
- Tariff Policy Shift: The Trump administration is reportedly considering new tariffs on imported semiconductors while simultaneously crafting exemptions for large tech companies to support their AI expansion, indicating a balance between promoting domestic manufacturing and protecting the tech sector.
- TSMC Investment Commitment: Taiwan Semiconductor Manufacturing Company (TSMC) has pledged to invest $165 billion to expand its manufacturing capabilities in the U.S., which is part of the tariff exemption framework and could help the U.S. reduce reliance on foreign chip production while enhancing its competitiveness in the global semiconductor market.
- Trade Agreement Impact: Under a U.S.-Taiwan trade agreement, Taiwanese firms building semiconductor plants in the U.S. would be allowed to import chips tariff-free in proportion to their planned domestic capacity, enabling TSMC to pass these exemptions on to its U.S. customers, thereby lowering operational costs.
- Ongoing Policy Review: While the exemptions provide some relief, administration officials stress that the plan is still evolving to ensure it does not become a
See More
Microsoft Stock Decline Approaches $3 Trillion Market Cap
- Stock Decline: Microsoft has seen its stock drop over 10% at the start of 2026, nearing a $3 trillion market cap, which would symbolize a significant decline for a normally stable stock, reflecting investor concerns about future growth.
- Earnings Report Disappointment: Although Microsoft's second-quarter revenue reached $81.3 billion, a 17% year-over-year increase, the cloud business Azure's growth rate of 39% fell short of analyst expectations, indicating potential slowdowns that could shake investor confidence.
- AI Business Potential: CEO Satya Nadella highlighted the rapid growth of Microsoft's AI business, which has become larger than some of its major franchises, suggesting that despite the slowdown in cloud growth, there are still significant opportunities in AI that could drive future growth.
- Investment Opportunity: Following the post-earnings sell-off, Microsoft's stock has dropped to levels not seen since April of last year, and while it is down about 20% over the past six months, this may present a compelling buying opportunity for long-term investors, especially given its attractive valuation relative to the S&P 500 and the growth potential in AI.
See More
