Why Morgan Stanley Raises Nvidia’s Price Target. Is AI the Reason?

According to Morgan Stanley, Nvidia, along with other chipmakers, could extend its recent gains as demand for artificial intelligence continues to grow.

Analyst Joseph Moore, who reiterated his “overweight” rating on the beloved artificial intelligence chip, raised his price target on the stock from $170 to $200. That represents about 14% upside from Tuesday’s closing price.

“The power of AI is extraordinary on both the demand and supply sides. All of our data and contacts tell us that customers need more compute resources, and we see a clear acceleration in inference workloads leading to this,” the analyst wrote on Wednesday. “We are seeing significant growth in the second half of the year with Blackwell’s new product cycle for both processors and connectivity/networking/memory and are raising our price targets across our entire AI semiconductor group.”

Nvidia shares have had a strong year, up nearly 31%. Earlier this month, the chipmaker said it planned to start shipping its H20 GPUs to China “soon.” That comes after the company said in April it would take a quarterly charge of about $5.5 billion due to export restrictions to China.

Advanced Micro Devices, which has outpaced Nvidia since the beginning of the year with a whopping 47% gain, could also get a boost from the move, Moore added. While he has the same rating on AMD, his updated price target from $121 to $185 reflects more than 4% upside going forward.

“The recovery of products for the Chinese market added new headwinds for AMD/NVDA in the second half, but our enthusiasm is still centered around the level of demand from core cloud customers,” the analyst wrote. “We see Nvidia as the biggest beneficiary of these costs, but AMD should also see growth in the second half around the Mi350 product cycle.”

Along with Nvidia and AMD, Moore remained overweight on other chipmakers like Broadcom, saying that “strong spending on artificial intelligence” will lead to growth that will come primarily “on the networking side, not the processors.”

Moore raised his price target for Broadcom shares from $270 to $338, implying more than 13% upside, and reiterated his “overweight” rating on the company’s stock. The company’s shares are up more than 28% this year.