Nvidia has been boosted by spending on artificial intelligence.
I-Hwa Cheng/Bloomberg
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Morgan Stanley
believes
Nvidia
’s
robust results from the artificial intelligence spending trend will last through the second half of this year.
On Monday, the firm’s technology analysts reiterated its Overweight rating for
Nvidia
shares (ticker: NVDA). A Morgan Stanley spokesperson said the firm’s price target for the chip maker is still $500.
“Nvidia remains [a] Top Pick, reflecting significant potential for near term upside — as the only company likely beating and raising due to AI in CY23,” the report said. Since Nvidia posted earnings in May “our industry contacts [are] reporting daily new orders from customers that were not contemplated as major customers until now.”
In early trading Monday, Nvidia stock is down 0.7%, to $421.88.
The analyst team is getting more optimistic about the demand environment for AI applications. According to Morgan Stanley estimates, 55% of Nvidia’s revenue consists of GPU (graphics processing unit) chips made for AI purposes, versus a low single-digit percentage for its main rival
Advanced Micro Devices
(AMD).
Nvidia’s “competitive position is superior to any other names within” the coverage, Morgan Stanley team said.
Nvidia’s products also have high exposure to generative AI, which has been trending this year. The technology ingests text, images, and videos in a brute-force manner to create content. Interest in this form of AI was sparked by OpenAI’s release of ChatGPT late last year.
The release of ChatGPT and its rapid success have also sparked a surge in interest for generative artificial-intelligence products that train on text, images, and videos to create content. The chatbot uses a language model that generates humanlike responses based on word relationships it has found by digesting what has been written on the internet or in other text.
Wall Street is generally positive on Nvidia stock. According to FactSet, 86% of analysts covering the company have Buy ratings or the equivalent on the shares, while 12% have Hold ratings.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/nvidia-ai-chip-sales-expectations-2023-morgan-stanley-4cdcff8c?siteid=yhoof2&yptr=yahoo