Why Nvidia Is Making a $3.5 Billion Bet on Taiwan-Based MediaTek
Semiconductor industry leader Nvidia Corporation (NVDA) has expanded its collaboration with Taiwanese fabless semiconductor company MediaTek to co-develop next-gen AI computing platforms. The centerpiece of this expanded partnership is MediaTek’s adoption of Nvidia’s NVLink Fusion interconnect. This lets MediaTek’s customers design custom AI accelerators (XPUs) that plug into Nvidia’s rack-scale AI factories. To show its…
Semiconductor industry leader Nvidia Corporation (NVDA) has expanded its collaboration with Taiwanese fabless semiconductor company MediaTek to co-develop next-gen AI computing platforms.
The centerpiece of this expanded partnership is MediaTek’s adoption of Nvidia’s NVLink Fusion interconnect. This lets MediaTek’s customers design custom AI accelerators (XPUs) that plug into Nvidia’s rack-scale AI factories. To show its commitment, Nvidia has also invested $3.5 billion in convertible bonds issued by MediaTek, giving the company the capital needed to develop these NVLink-supported chips.
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In an era where big tech is building its own AI chips, this deal helps Nvidia keep custom chips within its rack-scale ecosystem. This collaboration also spans cloud infrastructure, edge computing, and automotive systems.
We look more closely at the chip giant after its stellar earnings report to see why it remains the industry leader.
About Nvidia Stock
Nvidia has risen to become the world’s most valuable company, driven by its dominance in artificial intelligence and high-performance computing. Its cutting-edge GPUs and AI platforms underpin data centers, cloud infrastructure, and next-generation applications, making it a cornerstone of the global technology ecosystem and the primary engine behind the AI revolution. With a market capitalization of $5.33 trillion, Nvidia’s valuation reflects its central role in powering the rapid expansion of AI workloads and advanced computing.
Nvidia partners with big tech firms like Microsoft (MSFT), Amazon (AMZN), Alphabet’s (GOOG) (GOOGL) Google, and Meta (META) to power their AI data centers with its chips. It also teamed up with major Wall Street firms to raise over $500 billion, helping customers finance AI infrastructure. These deals are accelerating AI growth and making Nvidia’s technology central to the industry.
Nvidia’s stock is up 30% over the past 52 weeks as investors bet that AI demand will stay strong. Moreover, New chip architectures like Blackwell and Vera Rubin have reinforced its lead. This year, the stock has gained 19%. It reached a 52-week high of $236.54 on May 14 but is down 6% from that level.
Given Nvidia’s growth prospects, its stock is not that expensive. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 23.75x is only 3.8% higher than the industry average of 22.88x.
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Nvidia Q2 Earnings Beat as AI Demand Drives Record Revenue
The chip giant had blockbuster second-quarter results for fiscal 2027 (quarter ended July 26). The results highlighted accelerating demand, as Nvidia believes that AI has reached its inflection point. The company’s revenue increased 106% year-over-year (YoY) to $96.22 billion, above the $91.80 billion Wall Street analysts expected. Data center revenue drove the growth, climbing 117% YoY to $89 billion.
The topline tailwinds also reflected in bottom-line gains, as the company’s non-GAAP operating income increased 124% YoY to $63.96 billion, while its non-GAAP EPS climbed by 120% from the prior-year period to $2.22, surpassing the $2.09 that analysts had predicted.
For the third quarter of fiscal 2027, Nvidia expects revenue of $108 billion, plus or minus 2%, with a gross margin of 74%, plus or minus 50 basis points. Wall Street analysts are robustly optimistic about Nvidia’s future earnings. They expect the company’s EPS to climb by 99.2% YoY to $2.47 for Q3 FY2027. For fiscal 2027, EPS is projected to surge 99.1% YOY to $9.10, followed by 66.2% growth to $15.12 in fiscal 2028.
What Do Analysts Think About NVDA Stock?
Post its quarterly earnings release, analysts have generally taken a very positive stance on NVDA stock. Citigroup analyst Atif Malik maintained a “Buy” rating for Nvidia while raising its price target from $300 to $315, citing its strong fundamentals and market position. Analysts at RBC Capital maintained an “Outperform” rating on the stock and raised the price target from $300 to $330. They cited the company’s strong demand visibility, which outweighs small gross margin headwinds.
Oppenheimer analysts raised Nvidia’s price target from $265 to $315 and kept an “Outperform” rating on the shares after the company reported a robust upside. Oppenheimer also sees gross margin bottoming this year. A modest rebound is expected next year as the company absorbs some of the input-cost appreciation driving this gross-margin pressure.
Nvidia has been in the spotlight on Wall Street for some time now, with analysts awarding it a consensus “Strong Buy” rating overall. Of the 49 analysts rating the stock, a majority of 44 rate it a “Strong Buy,” three rate it a “Moderate Buy,” one analyst takes the middle-of-the-road approach with a “Hold,” and only one analyst gives it a “Strong Sell” rating. The consensus price target of $324.56 represents 46% upside from current levels. Moreover, the Street-high price target of $515 indicates a 131% upside.
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On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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