Goldman Names Nvidia Top Pick as Microsoft $7B Deal and Samsung $648B Plan Boost Demand
NVDA•Micron trades at about 9× Wall Street’s expected profits for the next 12 months, still below Nvidia, highlighting Nvidia’s premium valuation amid a tightening memory market. Goldman Sachs names Nvidia one of three top chip picks as Microsoft’s ~$7 billion Chevron power deal through 2048 and Samsung’s $648 billion AI memory expansion plan bolster GPU demand.
1. Valuation Premium Highlights Bottleneck
Nvidia’s forward P/E ratio remains above Micron’s roughly 9× expected profits for the next 12 months, underscoring a premium valuation driven by constrained memory supply and surging AI workload demand. This relative pricing suggests investors anticipate sustained profitability from Nvidia’s GPU portfolio even as component costs rise.
2. Microsoft’s Chevron Power Agreement
Microsoft secured a 20-year power purchase deal worth ~$7 billion with Chevron for a 2.67 GW natural gas plant in West Texas, ensuring stable energy costs through 2048. This addresses critical power constraints for large-scale AI data centers, directly supporting ongoing demand for Nvidia’s high-performance GPUs.
3. Samsung’s $648 Billion AI Memory Expansion
Samsung Electronics unveiled a decade-long, ₩800 trillion (~$648 billion) plan to expand chip factories, accelerating projects once scheduled for the 2040s to the mid-2030s. This massive investment in advanced memory capacity aims to alleviate the bottleneck that underpins AI server growth and strengthens Nvidia’s supply chain.
4. Wall Street’s Chip Rankings Shift
Goldman Sachs ranks Nvidia alongside Broadcom and AMD as its top semiconductor picks, citing superior revenue visibility compared with Intel. This endorsement follows Intel’s recent rally and reflects confidence in Nvidia’s leadership in AI accelerators and long-term growth prospects.
