Nvidia’s PC push carries downside risk for AEM, but DBS maintains ‘buy’ with S$11.80 target

[SINGAPORE] Nvidia’s expansion into the personal computer (PC) market has introduced “a new watchpoint” for Singapore-listed semiconductor chip testing firm AEM Holdings , according to DBS analysts.

In a Tuesday (Jun 2) note, DBS said that Nvidia’s RTX Spark introduces a “fresh competitive front in premium artificial intelligence PCs, adding pressure to the broader client processor ecosystem where AEM’s major customers are active”.

A successful ramp-up of Nvidia’s chip could create “some share shift risk for incumbent x86 players in client CPUs (central processing units)”, the analysts added.

Despite the downside risk, DBS Group Research maintained its “buy” rating on AEM with a 12-month target price of S$11.80, unchanged from its previous report on May 13.

Shares of AEM ended at S$9.77 on Tuesday, S$0.63 or 6.1 per cent lower.

“The read-through is not entirely negative,” the analysts said.

Adoption barriers for Nvidia’s superchip remain meaningful, including Windows-on-Arm compatibility, legacy enterprise applications and ecosystem inertia.

Further, AEM’s overall business is also insulated by its broader diversified exposure to the AI sector.

“AEM’s broader AI exposure, including data-centre GPU (graphics processing unit) and advanced compute opportunities, should be less directly affected by a PC-focused competitive shift,” DBS said.

SEE ALSO

Nvidia has capacity to supply robust AI growth despite constraints: CEO Jensen Huang

Nvidia’s superchip is set to debut in laptop and desktop computers from leading PC brands including Dell Technologies and Lenovo Group. It will feature a CPU that has up to 20 computing cores and a Blackwell-generation graphics processor with 6,144 cores.

The two elements will share built-in memory, making them better able to handle large AI models and high-end games.