The 'Exceptional' AI Strength of Nvidia Earns Morgan Stanley a Higher Price Target

Nvidia and other major semiconductor companies could see their strong market momentum continue as demand for artificial intelligence (AI) technology accelerates, according to Morgan Stanley.

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Analyst Joseph Moore reaffirmed his overweight rating on Nvidia, a leading player in AI chip development, while raising his price target for the stock from $170 to $200. This new target suggests a potential 14% increase from Tuesday’s closing price.

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“AI growth remains exceptionally strong on both the supply and demand sides,” Moore wrote in his Wednesday note. “All our research and industry contacts indicate that customers are seeking more computing power, with inference workloads clearly ramping up. We expect meaningful upside in the second half of the year, fueled by the upcoming Blackwell product cycle, which includes processors, networking, and memory. As a result, we are raising our price targets across our entire AI semiconductor coverage.”

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Nvidia’s shares have already performed well this year, gaining nearly 31%. Earlier in July, the company announced plans to soon begin delivering its H20 general processing units (GPUs) to China. This development follows Nvidia’s April disclosure that it would take a quarterly charge of approximately $5.5 billion due to U.S. export restrictions impacting its sales to China.

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Advanced Micro Devices (AMD), which has surged an impressive 47% year-to-date—outpacing Nvidia—also stands to benefit, according to Moore. Although he maintains an equal weight rating on AMD, Moore raised his price target significantly to $185 from $121, suggesting a further 4% upside potential.

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“The reinstatement of certain products for the Chinese market provides an additional tailwind for both AMD and Nvidia in the second half of the year,” Moore explained. “However, our primary optimism is driven by sustained demand from core cloud computing customers. Nvidia remains the largest beneficiary of this spending wave, but AMD should also see meaningful gains, particularly as it rolls out its Mi350 product cycle later this year.”

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In addition to Nvidia and AMD, Moore expressed a bullish outlook on Broadcom, another major chipmaker poised to gain from rising AI investment. Moore noted that Broadcom’s advantage would come mainly from its networking segment rather than its processors.

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Reflecting this positive view, Moore increased his price target for Broadcom from $270 to $338, indicating a potential upside of more than 13%. He also reiterated an overweight rating on the stock. Broadcom shares have already climbed over 28% this year, driven partly by robust spending in AI infrastructure.

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Overall, Moore’s analysis highlights strong, ongoing demand for advanced chips as AI adoption continues to grow globally. Nvidia’s upcoming Blackwell products, AMD’s Mi350 cycle, and Broadcom’s networking solutions are all expected to benefit from increased investment by cloud service providers and enterprises seeking to expand their AI capabilities.

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The analyst’s revised targets and ratings suggest confidence that the semiconductor sector will remain a key driver of market performance in the second half of the year. With supply catching up to soaring demand and new product launches on the horizon, Moore believes these leading chipmakers are well-positioned to capture significant growth opportunities in AI computing, networking, and memory solutions.

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