All Roads in AI Lead to Nvidia Chips, Says Morgan Stanley

Nvidia (NVDA) shares are up $3.79, or 1.7%, at $219.20. Morgan Stanley chip analyst Joseph Moore raised his rating on the stock to Overweight from Equal Weight, while keeping his $258 price target. Moore saw risk to both Nvidia and its only major graphics-chip competitor, Advanced Micro Devices (AMD). AMD has also benefited from sales into the crypto market. The cryptocurrency business concerns for Nvidia getting real now and the startup Bitmain Technologies has unveiled a custom chip for “mining” cryptocurrencies continues to worry some analysts covering chip giant Nvidia and now Nvidia stock is cheaper than it’s been, trading at 35 times forward earnings, versus a “recent peak” of 55 times, notes Moore. “Nvidia has grown at 4 to 5 times the semiconductor industry’s growth rate in recent years, and we believe that they can continue to do that,” “If we are wrong from here, we don’t think it would be about the multiple.”

His takeaway from the company’s GTC conference:

The longer-term debate is going to be NVIDIA’s data center products vs. cloud hyperscale custom chips, and longer term, startups within Intel, AMD, and venture backed startups. We have continued to monitor these debates with great interest, and will continue to do so; while a graphics chip is the best solution today for solving these problems, hands down, it’s not the best solution that customers can ever imagine. But in meetings with multiple customers at the company’s developer conference last week, it continues to be clear that the leaders in machine learning are building their products on NVIDIA silicon, with relatively high switching costs.

Tags: Nvidia,  NVDA, Nvidia shares, Nvidia Chips, Morgan Stanley, crypto market, cryptocurrency, NVIDIA’s data center, stocks, shares

Mohsen Daemi
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