On Monday, Morgan Stanley (NYSE:MS) reiterated its optimistic stance on NVIDIA Corporation (NASDAQ:NVDA), maintaining an Overweight rating and a $160.00 price target. The financial institution's analysis suggests that near-term expectations for NVIDIA should remain conservative, despite a projected strong performance in the second half of the year.
The firm's perspective is influenced by recent discussions with investors and industry feedback, which support the view of a transitional current quarter with a modest guidance above consensus. This comes in contrast to the previous quarter's expectations miss, with current sentiments reflecting greater confidence in the macro environment, supply of the new Blackwell product line, and robust AI spending.
The analyst noted that while NVIDIA's last earnings call hinted at a substantial Blackwell revenue contribution in the January quarter, the guidance might be more conservative. This is partly due to the possibility that Hopper sales might decline slightly as Blackwell expectations increase. The firm clarified that the high demand mentioned by NVIDIA management refers primarily to Blackwell, which is anticipated to account for less than 20% of revenue in the January quarter.
Despite some pushback from detail-oriented investors with higher expectations, Morgan Stanley's stance remains focused on the anticipated strong ramp-up of the Blackwell product line. The firm emphasizes that while near-term upside to consensus for January may be limited, the long-term outlook is bolstered by the Blackwell ramp's potential.
In other recent news, NVIDIA has seen a series of positive developments. Analysts from Evercore ISI, Jefferies, Oppenheimer, Raymond (NS:RYMD) James, and Wedbush Securities have reaffirmed their positive ratings on NVIDIA, citing strong demand for the company's products and anticipation of robust earnings results. Evercore ISI highlighted a balanced view of near-term risks and recommended purchasing NVIDIA shares ahead of the company's third fiscal quarter earnings report.
Jefferies adjusted its estimates to reflect the anticipated Blackwell ramp, while Oppenheimer maintained its positive outlook due to the continued demand for Artificial Intelligence (AI) accelerators. Meanwhile, Raymond James increased its price target on NVIDIA shares, anticipating a robust upcoming quarter, and Wedbush Securities raised the stock's price target, citing NVIDIA's consistent performance and anticipated growth in the AI sector.
In collaboration with SoftBank (TYO:9984) Corp, NVIDIA has launched the world's first combined artificial intelligence and 5G telecommunications network, known as an artificial intelligence radio access network (AI-RAN). This development has potential applications in various sectors, including autonomous vehicles and robotics control.
Analysts at HSBC and Susquehanna have also raised their price targets, citing strong demand for NVIDIA's Hopper architecture, Blackwell processors, and the company's growth in the data center sector.
HSBC anticipates NVIDIA's third-quarter sales to reach $35.3 billion, surpassing both management's guidance and consensus estimates. Looking ahead, HSBC's sales forecasts for the fourth quarter of fiscal year 2025 and the first quarter of fiscal year 2026 are $38.0 billion and $42.7 billion, respectively.
In the semiconductor sector, both Citi and Redburn-Atlantic have given NVIDIA a 'buy' rating, reflecting a positive outlook on the company's prospects in the field of accelerated computing.
InvestingPro Insights
NVIDIA's financial metrics and market performance align closely with Morgan Stanley's optimistic outlook. According to InvestingPro data, NVIDIA boasts an impressive revenue growth of 194.69% over the last twelve months, with a robust gross profit margin of 75.98%. These figures underscore the company's strong market position and operational efficiency, supporting Morgan Stanley's Overweight rating.
InvestingPro Tips highlight NVIDIA's strengths, noting that analysts anticipate sales growth in the current year and that the company has impressive gross profit margins. These tips corroborate Morgan Stanley's expectations for strong performance in the second half of the year. Additionally, NVIDIA's trading near its 52-week high and its large price uptick over the last six months (53.55% according to InvestingPro data) reflect the market's confidence in the company's future prospects, particularly with the anticipated Blackwell product line.
For investors seeking a more comprehensive analysis, InvestingPro offers 21 additional tips on NVIDIA, providing a deeper understanding of the company's financial health and market position.
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