Morgan Stanley upgrades Nvidia (NVDA), says stock hard to ignore amid generative AI opportunity

Morgan Stanley analyst Joseph Moore upgraded shares of Nvidia (NASDAQ: NVDA) to Overweight from Equal-weight with a price target of $304.00 per share (up from the prior $255.00).

While Moore continues to see challenges in NVDA’s data center and gaming businesses, he states that the “development of generational AI is too much of a megatrend to get distracted by tactical concerns.”

“The stock will continue to be hard to ignore in an otherwise challenging semiconductor environment,” Moore wrote in an upgrade note.

The generative AI narrative is simply too strong with this trend seen as one of the most significant developments in technology in the last decade.

“The high capital intensity of these workloads, particularly on the training side, is now a major part of the calculus for the largest companies in technology, with NVIDIA having dominance in the training market that is likely to persist for several years; even with a relatively fixed number of model developers, model complexity plus multiple languages should still drive 3-5xgrowth in training over 5 years,” Moore added.

As a result, Morgan Stanley analysts are witnessing “a significant shift in cloud spending towards AI (and in our view towards NVIDIA), even as budget are under pressure.”

Similarly, NVIDIA saw its price target raised at Citi to $305 per share on the generative AI arms race. The bull case now stands at $400 “on accelerating generative AI adoption based on multiple cloud service providers like AWS, MSFT, Alphabet, and Baidu comments this week,” analyst Atif Malik wrote in a note.

“Despite macro concerns, hyperscalers are prioritizing cloud capex spending on a broad set of generative AI/ML use cases. We view Nvidia’s flagship GTC conference next week to be a key event to showcase the future of generative AI for the industry.”

Nvidia stock trades about 1.5% higher in pre-market Friday.

By Senad Karaahmetovic

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