Nvidia (NVDA) shares rose as much as 2.7% early Thursday as Wall Street analysts reiterated their Buy rating on the stock, despite concerns about increasing competition and the possibility that demand for AI chips will weaken could.

In recent days, Wall Street analysts at Bernstein, TD Cowen, Morgan Stanley (MS) and Truist (TFC) have maintained their bullish outlook on the company.

“All relevant industry contacts support the dominance and superiority of NVDA’s entire technology stack,” William Stein of Truist Securities wrote on Monday. He raised his price target on the stock to $204 from $169.

Nvidia shares rose as much as 4.8% on Wednesday following Wall Street’s approvals. But the stock later reversed direction and ended the day down about 1%, as stocks fell across the board after the Federal Reserve forecast fewer interest rate cuts and continued inflation in 2025.

Even with Thursday’s early morning surge, Nvidia shares are still about 11% below their record closing price of $148.88 in early November.

Nvidia shares have fallen as investors fear the company’s GPUs could lose share in the broader AI chip market as customers develop their own chips. Google (GOOG) and Meta (META) have developed chips with Broadcom (AVGO). Microsoft (MSFT), Tesla (TSLA) and Amazon (AMZN) also make their own custom chips. Broadcom’s announcement that it would develop chips for two more customers, believed to be ChatGPT maker OpenAI and Apple (AAPL), sent the chipmaker’s stock higher last week and Nvidia’s in the opposite direction sent.

These custom chips, called ASICs (Application-Specific Integrated Circuits), could potentially pose a threat to Nvidia’s GPUs because they are cheaper and tailored to a tech company’s specific AI needs. A Morgan Stanley report released on December 15 showed that custom chips used to run cloud AI services could increase their share of the total AI chip market from 11% in 2024 to 15% in 2030.

Still, Morgan Stanley said, “History is certainly on Nvidia’s side” when it comes to maintaining dominance in the AI ​​chip market. “We believe ASICs have continued to improve, but Nvidia’s strong performance continues to raise the bar for its competitors.”

This is a point about Nvidia that Bank of America semiconductor analyst Vivek Arya reiterated on an episode of the Opening Bid podcast (video above) on Wednesday.

Additionally, there are concerns that Big Tech’s spending on AI chips, which fueled Nvidia’s rise, could slow. Comments from Microsoft and Google in their recent earnings reports suggested that their AI spending will grow more slowly in the future. And there are concerns that AI models will no longer improve at their previous rapid pace, which could also put a damper on investment.

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TD Cowen analyst Joshua Buchalter said the company’s recent meeting with Nvidia showed the chipmaker was aware of those concerns “but remains confident that the industry can move forward and continue to innovate.”

Stein also believes NVDA will announce a standalone CPU, or central processing unit – the “brains” of a computer, as opposed to Nvidia’s Hopper and Blackwell GPUs or graphics processing units – in 2025, which he says represents a $35 billion market opportunity opened. Nvidia currently uses its Arm-based Grace CPUs alongside its Blackwell GPUs in servers it sells to customers, but does not sell the CPUs individually.

Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.

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