Nvidia GTC Paris is 'another bullish proof point' long term

Morgan Stanley reiterated its Overweight rating on Nvidia, naming it a top pick after Nvidia's GTC conference in Paris highlighted the company's long-term growth potential beyond 2025, particularly in European AI investment, quantum computing, and industrial/physical AI applications. Nvidia announced significant European expansion plans, including large Blackwell compute deployments in France and the UK, and the creation of an industrial AI cloud for European manufacturers. The firm estimates European GPU revenue could grow 8x from 2024 to 2026, noting Nvidia's confidence and outperformance against ASIC competitors.

Analysis

Morgan Stanley's assessment following Nvidia's GTC conference in Paris indicates robust long-term growth prospects for Nvidia (NVDA) beyond 2025, providing what the firm terms "another bullish proof point." While the conference lacked immediate stock-moving announcements, it highlighted significant strategic initiatives, particularly in "European catch-up investment" in AI, with the EU launching a €200 billion AI initiative, including €20 billion for five AI gigafactories. Nvidia is actively pursuing this opportunity, announcing plans for over 3,000 exaflops of its Blackwell compute, an 18k GB200 phase one deployment with Mistral in France, a 14k Blackwell development in the UK, and the development of the "world’s first industrial AI cloud for European manufacturers" alongside new AI centers across Germany, Sweden, Italy, Spain, the U.K., and Finland. Consequently, Morgan Stanley estimates Nvidia's European GPU revenue could surge by 8x or more from CY24 to CY26. The company is also making inroads into "robotics and physical AI," with current investments affirming this direction. CEO Jensen Huang expressed a more constructive timeline for hybrid GPU/QPU systems, reinforcing Nvidia's strategy of complementing quantum computing with classical simulation. Furthermore, the expansion of Nvidia's DGX Cloud Lepton marketplace, incorporating AWS and Azure, aims to streamline global compute resource management for developers. Despite Nvidia management's typically conservative communication style, Morgan Stanley characterized them as "highly confident," noting that "NVIDIA is outgrowing ASIC competitors meaningfully," leading to a reiteration of their Overweight rating and designation of Nvidia as their "Top Pick in semis."

Key Decisions for Investors

• Investors should consider the substantial long-term growth catalysts for Nvidia, particularly its strategic expansion into the European AI market, its advancements in industrial and physical AI, and its positioning in quantum computing, as emphasized by Morgan Stanley's analysis.
• The projected eightfold growth in European GPU revenue by CY26 and Nvidia's documented outperformance against ASIC competitors suggest a continued strong competitive position, potentially warranting a review of portfolio allocations towards Nvidia within the semiconductor sector.
• It would be prudent to monitor the execution of Nvidia's European expansion initiatives, the adoption rates of its industrial AI cloud, and the development of its DGX Cloud Lepton marketplace with new partners like AWS and Azure, as these are key indicators of its sustained growth trajectory.