Morgan Stanley raises Nvidia price target, cites ‘exceptional’ AI strength

Morgan Stanley analyst Joseph Moore has raised price targets and reiterated overweight ratings on key AI chipmakers, including Nvidia ($200 PT, 14% upside) and Broadcom ($338 PT, 13% upside), while also increasing AMD's target to $185 (4% upside). Moore cites "exceptional" AI strength, driven by robust customer demand for compute, upcoming product cycles like Nvidia's Blackwell and AMD's Mi350, and the reinstatement of products for the China market, projecting significant second-half upside for the sector.

Analysis

A Morgan Stanley research note signals a strongly bullish outlook for the AI semiconductor sector, driven by what the analyst terms "exceptional" supply and demand dynamics. The firm has reiterated its overweight ratings on Nvidia (NVDA) and Broadcom (AVGO), increasing their price targets to $200 and $338 respectively, implying potential upsides of 14% and 13%. This optimism is rooted in accelerating demand for compute power, particularly for inference workloads, from core cloud customers. The report identifies significant second-half catalysts in new product cycles, specifically Nvidia's Blackwell platform and AMD's Mi350. While Advanced Micro Devices (AMD) also received a substantial price target increase to $185, its rating remains equal weight, reflecting a more moderate view despite its 47% year-to-date outperformance over Nvidia's 31% gain. The reinstatement of product shipments to China, such as Nvidia's H20 GPUs, is noted as a positive tailwind but is considered secondary to the primary demand from cloud infrastructure spending. Broadcom's upside is expected to be driven primarily by its strength in AI-related networking rather than processing units.

Key Decisions for Investors

• Investors with a high conviction in the AI growth narrative should consider the analyst's overweight-rated names, Nvidia and Broadcom, which are positioned to benefit from strong cloud demand and upcoming product cycles.
• Given AMD's significant 47% year-to-date appreciation and its 'equal weight' rating, it may be prudent to evaluate existing positions and assess its relative value compared to more favorably rated peers like Nvidia.
• Monitor key second-half catalysts, including the market adoption of Nvidia's Blackwell and AMD's Mi350 product lines, as their successful rollout is a core component of the bullish thesis for the sector.
• For diversified exposure within the AI theme, note the distinction that Broadcom's primary upside driver is identified as AI networking, offering a different angle of exposure compared to the GPU-centric models of Nvidia and AMD.