Mizuho analysts have found a major winner from surging AI GPU demand from customers Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). The winner is Taiwan-based Chroma ATE (TW:2360).
"Chroma is the major beneficiary of AI GPU and ASIC due to its dominant position in the AI / HPC SLT (system level tester) market," analysts commented. "We foresee continued robust SLT business in 2H23 and 2024 due to incremental orders from Nvidia’s AI GPU (H100) and automotive GPU, AMD’s AI GPU (MI300), Qualcomm’s automotive SoC, and US cloud players’ own designed processors."
Additionally, there is an anticipation of increased demand for SLT upgrades from its key clients, resulting in potential growth in sales and improved profit margins.
"We expect Chroma’s GPM to improve to 53%-55% or higher in 2023-24 from 44%-49% in 2015-21 due to above-corporate-average GPM for SLT business," the analysts added. "Thus, we increase our EPS forecast by 7% for 2023 and 12% for 2024."
As a result, analysts raised their price target on Chroma by 36% from TWD 250 to TWD 340 (TWD 1 = $0.0322), while reiterating a Buy rating.