Nvidia Stock: It’s All About Blackwell Strength, Says Morgan Stanley

Nvidia’s (NASDAQ:NVDA) seemingly never-ending surge has been more muted in recent times. While sentiment has far from soured – the stock after all has gained more than 172% throughout the year – various concerns have been on investors’ minds.

However, looking at how things have panned out in the past, Morgan Stanley analyst Joseph Moore thinks current sentiment sets the scene for strong performance further down the line. “We have tended to be most enthusiastic on NVIDIA when the near-term data points appear mixed, but underlying dynamics are very strong. We think we are approaching that point now,” the 5-star analyst said.

As for investor concerns, addressing these, Moore thinks some are exaggerated, while others may cause short-term anxiety but are “irrelevant longer term.”

So, what are these concerns? There’s the fact the pace of building prior-generation Hopper units is slowing. But that isn’t surprising as the product approaches its end-of-life. While this may generate some noise early next year, it’s a “non issue.” Hopper revenue will continue for a few more quarters due to a strong backlog, but it’s time to shift resources toward newer Blackwell products.

As for Blackwell, there’s concern about the timing of the products’ rollout – there are several variants – with Moore hearing of “anxiety about some of the types that aren’t ready.” However, Moore says that it should be expected that not all versions will be ready to ship simultaneously. In any case, following a trip to Asia, the analyst makes the case that Blackwell supply overall is “surpassing expectations, which is the most important dynamic.”

There have also been worries over “ASIC encroachment.” ASICs, which have been part of the AI landscape for years, are gaining traction, as seen with Marvell and Broadcom’s growth projections. But here, Moore sees Nvidia as well-positioned to gain market share in 2025 as customers increasingly favor GPUs for their versatility and performance.

Essentially, Moore’s take is that Blackwell demand is the key, with investors just needing patience for now.  “We see the next couple of quarters as transitional, with similar revenue upside than we have seen the last two quarters (albeit without the gross margin headwinds), before numbers break out around Blackwell in 2h25,” Moore summed up.

As such, Nvidia retains its status as a “Top Pick,” with Moore reiterating an Overweight (i.e., Buy) rating backed by a $166 price target, implying the stock will post gains of 20% in the months ahead. (To watch Moore’s track record, click here)

Of the 40 NVDA reviews submitted during the past 3 months, 37 say Buy while only 3 recommend to Hold, all adding up to a Strong Buy consensus rating. The average target stands $177.14 and factors in one-year returns of 28%. (See Nvidia stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.