Morgan Stanley just met with Nvidia’s CEO and came away even more confident in its top pick

Source according to CNBC (archive):

• Nvidia remains at the forefront of artificial intelligence innovation, with new opportunities to gain market share, Morgan Stanley said.

• Analyst Joseph Moore reiterated his overweight rating on the chipmaker and said meetings with Nvidia’s CEO and other management reinforced the firm’s view that it is the top pick in semiconductors. Morgan Stanley hosted the company for a three-day nondeal road show this week.

• “We remain very bullish longer term, but would concede given the rally that shorter-term upside from here raises the bar on earnings somewhat,” Moore said in a Thursday note to clients. His $150 price target implies about 13.1% potential upside for the stock, which has skyrocketed nearly 167% this year.

• “This is still an exceptional situation, with AI the most important trend in technology, and NVIDIA unquestionably the biggest beneficiary of those investments,” he said.

• Long-term confidence in Nvidia’s growth remains high, the analyst said. Management highlighted opportunities in evolving generative AI inference that will scale exponentially involving “long thinking” — or inference interactions that require substantially more computation. Moore explained that these tasks will require a “much richer mix of hardware” that will provide Nvidia with a new avenue for growth.

• “NVIDIA’s upcoming rack scale products as an optimal solution,” Moore said. “The longer term vision is that deep thinking will allow every company in the world to hire large numbers of ‘digital AI employees’ that can execute challenging tasks,” he added.

• According to Moore, Nvidia’s Blackwell systems NVL36/72 are the optimal solution for those challenges, as he believes they provide a more capable processor to the AI markets, with the GB200 systems potentially being the most important innovation as they have a “full rack” approach. Under that approach, Nvidia enables 36 or 72 GPU racks to simultaneously communicate with other graphics processing units, enhancing the ability to treat the entire rack as one massive system.

• “Our view continues to be that NVIDIA is likely to actually gain share of AI processors in 2025, as the biggest users of custom silicon are seeing very steep ramps with NVIDIA solutions next year,” Moore said.

• The analyst is also confident that the Blackwell rollout is on schedule, with orders booked out roughly 12 months, which also drives strong short-term demand for Nvidia’s Hopper GPU architecture.

• “In the shorter term, the Blackwell ramp appears to be quite strong, with no major changes to the roadmaps and every indication that business remains robust with very high forward visibility,” Moore said.