According to Zhiyuan Finance APP, strengthening cooperation with NVIDIA (NVDA.US) has elevated investors' optimism about MediaTek's AI growth potential to a new level, with MediaTek's stock price expected to reach a seven-month high.

On January 8, MediaTek confirmed its participation in the design of NVIDIA's GB10 Superchip used for the Project DIGITS "personal AI supercomputer" unveiled at CES 2025. The GB10 Superchip features NVIDIA's Blackwell architecture GPU with FP4 AI computing power of up to 1 PFLOP and a Grace CPU with 20 energy-efficient ARM architecture cores, connected through NVLink-C2C. As a major SoC design player for the Arm architecture, MediaTek has 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 and MediaTek already have a partnership in automotive technology. The latest collaboration has fueled expectations for further increases in MediaTek's stock price. Investment manager Robert Mumford stated that MediaTek is known for its critical role in the mobile phone supply chain and is now "in a very favorable position in the development of AI technology." He added that the projects in collaboration with NVIDIA and anticipation for more projects in the future indicate that "MediaTek has enormous opportunities in diversified business areas."

Meanwhile, MediaTek also benefits from the improved outlook for smartphone chips, which still account for more than half of its revenue. This has been a major factor driving the market's general expectation of about a 5% increase in MediaTek's sales for the fourth quarter of 2024 over the past few months.

Considering that the customer base for the GB10 Superchip is niche, it is expected to not bring much sales revenue to MediaTek in the short term, but there is high overall expectation for the company's AI-related business. Robert Mumford mentioned that much of the excitement is related to the potential of dedicated Application-Specific Integrated Circuits (ASICs) for datacenters.

American Bank securities analysts, including Brad Lin, stated in a report that MediaTek's expertise in low-power processors, Wi-Fi, and multimedia "complements NVIDIA's capabilities well," and "as MediaTek expands into broader markets with NVIDIA, this lays the foundation for a long-term increase in its stock price."

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 PE is 20 times, higher than the five-year average of 16 times, reflecting a growing optimism among investors. However, it still lags behind companies like NVIDIA and Broadcom (AVGO.US), which have expected PEs of over 30 times.

Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management, stated that compared to American tech giants, "MediaTek is still in the discovery phase for most AI momentum." He added that the company seems to be winning the AI race against mobile chip competitor Qualcomm (QCOM.US).

Morningstar analyst Phelix Lee stated that MediaTek will release the Dimensity 8400 and other chips for high-end smart phones in the coming months, which will be key catalysts to watch, and news of further collaboration with NVIDIA in the AI field could also push the stock price higher.

Analysts at Morgan Stanley, including Charlie Chan, stated in a report: "The next collaboration may involve launching Arm-based Windows AI personal computer chips 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."