Is NVDA over or undervalued? MS updates price target today from $500 to $650, notes “remarkable growth” and massive “unmet demand.”

Amid some claims that NVDA is currently overvalued, I think it is undervalued and continue to hold and buy NVDA stock. What do you think?

For one analysis in the middle of the price targets (currently ranging from $370 to $800) see Morgan Stanley's research update today, August 24th, 2023 (by Joseph Moore, Mason Wayne, Shane Brett):

“Last quarter was the first time in semis history that we saw a company guide revenues $4 bn above consensus; with admittedly higher expectations this quarter, NVDA did it again…”

Notes that NVDA is showing remarkable growth:

“To grow a business of this complexity this rapidly with such a recent inflection is remarkable supply chain performance. But what is even more impressive is the fact that from most of our channel assessments that NVIDIA is only meeting about half of the demand, despite growing revenues by more than 3x in 6 months.”

Rates NVDA overweight with a $650 price target:

“These are remarkable results, particularly in the context that the company is looking at so much unmet demand; the breadth of AI spending is clearly growing and appears to be durable. The company is executing across silicon, systems, software, and supply chain as the market is inflecting. It's fair to argue that the stock price discounts much of that, with an elevated multiple, but we don't see that changing.

We continue to prefer to be conservative on EPS and aim for a higher multiple given the longer-term importance of the TAM. Still, as estimates move much higher reflecting a number closer to the longer-term TAM, it seems appropriate to trim our multiple expectations; we are moving down from our prior 50x MW/45x non GAAP to 42x MW/37x non GAAP, similar to levels where the stock has traded in the past on mid-cycle estimates.

While it's the highest valuation in our coverage, that seems warranted by the unprecedented ability to put up numbers as we have seen in the last two quarters around the most important current trend in technology. That brings the target up from $500 to $630; stock remains Overweight rated, and remains our top pick in semis.”

[Disclosure: I hold NVDA stock]