Nvidia is a 'hard to ignore' stock as 'arms race' for AI heats up, analyst says
Nvidia Corp. NVDA's recent stock market gains. hinge on the graphics chipmaker's AI opportunity, prompting Morgan Stanley to turn bullish on the stock.
The Analyst: Joseph Moore moved Nvidia shares from equal weight to overweight and raised the price target from $255 to $304, suggesting upside potential of around 19%.
Thesis: Morgan Stanley's take on contested tactical numbers in both gaming and data centers has largely come to fruition, Moore said in a note. “Generational AI development is too much of a megatrend to be distracted by tactical concerns,” he said.
See also: Best Semiconductor Stocks
Nvidia's shares will continue to be "hard to ignore" in an otherwise challenging semiconductor environment, the analyst said. AI has become one of the most important developments in technology.
It will likely replace human capital at scale, with cloud customers vying for leadership over the next three to five years, Moore said. As the intensity of AI workloads, especially on training, increases, Nvidia is likely to be a big beneficiary, given its dominant position in the training market, Moore said. He also noted a significant shift in cloud-related spending towards AI, potentially towards Nvidia.
Nvidia's valuation soared on near-term estimates, but the entire semiconductor group also rallied at an "uncomfortable point" that there has few bargains in areas with long-term growth potential, especially as conditions are tough, Morgan Stanley said.
"If we extrapolate 5-year growth trends, NVIDIA's valuation is high, but not dramatically different from its peers," Moore said. "We missed the larger picture elements that NVIDIA is now the arms dealer for one of the most important tech races."
Expect high investment in Nvidia products. That's bad for the rest of IT, as the budget squeeze comes up against high demands on AI spending, he explained.
Nvidia Price Action: In pre-market trading, Nvidia shares traded up 1.09% to $258.16, according to data from Benzinga Pro.< /p>
Next: Nvidia Sparks AI Acquisition Craze With $10 Billion Mixed Offer
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Nvidia Corp. NVDA's recent stock market gains. hinge on the graphics chipmaker's AI opportunity, prompting Morgan Stanley to turn bullish on the stock.
The Analyst: Joseph Moore moved Nvidia shares from equal weight to overweight and raised the price target from $255 to $304, suggesting upside potential of around 19%.
Thesis: Morgan Stanley's take on contested tactical numbers in both gaming and data centers has largely come to fruition, Moore said in a note. “Generational AI development is too much of a megatrend to be distracted by tactical concerns,” he said.
See also: Best Semiconductor Stocks
Nvidia's shares will continue to be "hard to ignore" in an otherwise challenging semiconductor environment, the analyst said. AI has become one of the most important developments in technology.
It will likely replace human capital at scale, with cloud customers vying for leadership over the next three to five years, Moore said. As the intensity of AI workloads, especially on training, increases, Nvidia is likely to be a big beneficiary, given its dominant position in the training market, Moore said. He also noted a significant shift in cloud-related spending towards AI, potentially towards Nvidia.
Nvidia's valuation soared on near-term estimates, but the entire semiconductor group also rallied at an "uncomfortable point" that there has few bargains in areas with long-term growth potential, especially as conditions are tough, Morgan Stanley said.
"If we extrapolate 5-year growth trends, NVIDIA's valuation is high, but not dramatically different from its peers," Moore said. "We missed the larger picture elements that NVIDIA is now the arms dealer for one of the most important tech races."
Expect high investment in Nvidia products. That's bad for the rest of IT, as the budget squeeze comes up against high demands on AI spending, he explained.
Nvidia Price Action: In pre-market trading, Nvidia shares traded up 1.09% to $258.16, according to data from Benzinga Pro.< /p>
Next: Nvidia Sparks AI Acquisition Craze With $10 Billion Mixed Offer
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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