Nvidia has been under pressure in recent weeks amid a rethink of the AI trade, but one top bank says investors don’t have much of a reason to worry about the chip king.
Nvidia stock is down 9% over the last month. Even its blockbuster third-quarter earnings failed to generate new excitement for the company and the broader AI sector. Big-name investors like Peter Thiel and SoftBank have dumped the stock, adding pressure.
But Morgan Stanley’s Joseph Moore this week pushed back on the downbeat narratives, increasing the bank’s price target for the stock to $250 from $235 on Monday. The new target is among the highest on Wall Street, and implies a nearly 40% jump from current levels.
Moore said that he thinks threats to the AI leader’s market share, specifically those in Asian markets, are overstated.
Speculation that Nvidia’s dominance in the AI market may be threatened isn’t new. Ever since the AI leader shot to the top of the tech sector following the launch of ChatGPT in November 2022, investors have wondered how long it can maintain the rank as the top AI hardware maker.
Morgan Stanley doesn’t see any other chipmakers as posing a significant threat to Nvidia, though, even as China prioritizes building out its own domestic semiconductor supply chain. The analysts recently visited Asia and shared their take on why Nvidia shouldn’t be worried about competition from the east.
“While there is much attention being paid to Chinese AI solutions, we think that they are very limited on multiple levels, including cluster size and scale out technologies, and China software still would like access to western solutions,” the analysts stated in a note on Monday.
Moore also said his team reconciled the ambitious $500 billion estimate for chip revenue given by CEO Jensen Huang at Nvidia’s GTC event in October.
“Having met with several contacts in both Asia and in the US, we are comfortable increasing estimates to get revenues to that level.”
While the analysts increased their price targets for both Nvidia and fellow chipmaker Broadcom, they said they still see Nvidia as the sector’s clear winner.
“We model for AVGO and AMD to grow their AI processor revenues slightly faster than NVDA in CY26, but that mostly just reflects supply chain limitations of a $205 bn run rate revenue stream – all key products are supply constrained through 2026,” the note stated.
The analysts are convinced that even as competition in the AI chip market intensifies, Nvidia will still maintain the best performance-to-cost ratio and be able to access a wider range of AI applications and workloads than its competitors.