Join hands with NVIDIA to boost market sentiment, MediaTek's stock price is expected to reach a new high in seven months.

The strengthened collaboration with NVIDIA Corporation has pushed investor optimism about the growth potential of MediaTek's artificial intelligence (AI) to a new level, with MediaTek's stock price expected to hit a seven-month high. On January 8, MediaTek confirmed its participation in NVIDIA Corporation's Project DIGITS "personal AI supercomputer" unveiled at CES 2025, using the GB10 Superchip design. The GB10 Superchip is equipped with an NVIDIA Corporation Blackwell architecture GPU with FP4 AI computing power up to 1PFLOP, and a Grace CPU with 20 ARM architecture energy-efficient cores, connected via NVLink-C2C. MediaTek, as a significant Arm architecture SoC designer, contributed to the efficiency, performance, and connectivity of the GB10 Superchip. Over the past two years, MediaTek's stock price has more than doubled. NVIDIA Corporation and MediaTek have already partnered in the automotive technology field. The latest collaboration fuels expectations for further increase in MediaTek's stock price. Investment manager Robert Mumford stated that MediaTek, known for its key role in the smartphone supply chain, is now also "in a very advantageous position in the development of artificial intelligence technology." He added that projects in collaboration with NVIDIA Corporation and expectations for more future projects indicate that "MediaTek has tremendous opportunities in diverse business areas." At the same time, MediaTek also benefits from the improvement in the outlook for smartphone chipsets, which still account for over half of its revenue. This is an important factor that has been driving market expectations for a 5% increase in MediaTek's fourth quarter sales in 2024 over the past few months. Considering that the customer base for the GB10 Superchip is niche, it is not expected to bring much revenue to MediaTek in the short term, but overall expectations for the company's artificial intelligence-related business are high. Robert Mumford stated that much of the excitement lies in the potential of working with Application-Specific Integrated Circuits (ASIC) for data centers. Bank of America Corp securities analyst Brad Lin, among others, stated in a report that MediaTek's expertise in low-power processors, Wi-Fi, and multimedia "complements NVIDIA Corporation's capabilities very well," and "as MediaTek expands into wider markets with NVIDIA Corporation, this lays the foundation for long-term stock price growth." Analysts are also eager to keep up with the rise in MediaTek's stock price, with the average target price for the stock increasing by 47% over the past year. The stock's current expected price-to-earnings ratio is 20 times, higher than the five-year average of 16 times, reflecting increasing investor optimism. However, there is still a gap compared to the expected price-to-earnings ratios of over 30 times for companies like NVIDIA Corporation, Broadcom Inc., etc. Edmond de Rothschild Asset Management fund manager Xiadong Bao stated that compared to US tech giants, MediaTek is still in the discovery stage in most aspects of artificial intelligence momentum. He added that the company seems to be winning the artificial intelligence race with its smartphone chipset rival Qualcomm. Morningstar analyst Phelix Lee mentioned that MediaTek will release the Dimensity 8400 and other chips for high-end smartphones in the coming months, which will be a key catalyst to watch, and news of further collaboration with NVIDIA Corporation in the AI field could also boost the stock price. Morgan Stanley analysts, including Charlie Chan, mentioned in a report that "the next collaboration could be the launch of an Arm-based Windows AI personal computer chip in May this year," and "given the greater sales potential of AI personal computers, we believe this will be another positive catalyst for the stock."