UBS joins Morgan Stanley in bullish chorus: Raises NVIDIA target price to $150

According to Zhitong Finance, UBS reiterated its "buy" rating on NVIDIA (NVDA.US) on Monday and raised its target price from $120 to $150. UBS pointed out that recent surveys show "very strong" demand for its upcoming Blackwell series products. UBS analyst Timothy Arcuri stated that based on recent surveys of Blackwell, NVIDIA's earnings per share could be around $5 by 2025, as budget increases for large-scale processors NVL72 and NVL36 have seen significantly higher order volumes than two months ago. In addition, Arcuri mentioned that investors may see returns as concerns have emerged in recent weeks, and the recent market overheating sentiment has subsided.

Morgan Stanley Bullish on NVIDIA as well

Benefiting from the strong chip demand brought by the AI boom, Wall Street's optimism towards NVIDIA is evident, with NVIDIA at the center of the AI boom being a strong tech stock favored by analysts.

Morgan Stanley, a top Wall Street investment bank, significantly raised its performance expectations and target stock price for AI chip leader NVIDIA, stating that after its latest research, the institution believes that NVIDIA's performance data for at least this year will be "very strong" due to unparalleled demand. After research, Morgan Stanley raised NVIDIA's target stock price for the next 12 months from $116 to $144 and maintained its "overweight" rating on NVIDIA. Overall, Morgan Stanley continues to be bullish on NVIDIA's stock price, believing that its performance will be much stronger than the broader market, but it will still take time to recover from the recent pullback.

Stock analyst Joseph Moore from Morgan Stanley wrote in a recent research report that recent chip industry chain research from Taiwan, China is enough to keep the institution confident in NVIDIA's recent performance data, with demand as a catalyst path still "strong."

Morgan Stanley's research data shows that the outlook for NVIDIA's AI GPU demand remains very strong, with astonishing demand for H100, increasing visibility for H200, and strong demand from Chinese companies for NVIDIA's H20. Morgan Stanley stated that although the delivery time for H100 has significantly shortened, this is a natural occurrence during the product transition period, and Morgan Stanley expects visibility to improve significantly in the next 3-4 quarters. While the market's strong expectations for NVIDIA's AI GPU have partly been reflected in the stock price increase, Morgan Stanley remains very optimistic about NVIDIA's future prospects.

After the latest research, Morgan Stanley analyst Moore now believes that NVIDIA's earnings per share could reach $3.34 on a GAAP basis, and adjusted earnings per share could reach $3.53, far exceeding Morgan Stanley's previous expectations of $2.91 and $3.10.

Bank of America also released a report stating that the semiconductor industry's relative weight has decreased by 9% to 0.99 times, continuously declining from the peak of 1.36 times in March 2017 to below the level of 1.16 times in June 2023 Despite a slight decrease in relative weight, NVIDIA still has the widest ownership base, with 68% of fund managers holding the stock. This proportion remains at a historical high and has increased by 10 basis points compared to the previous period, indicating that fund managers are still including this semiconductor giant in their portfolios.

NVIDIA Rarely Downgraded, Analysts: Upside Exhausted

In contrast, New Street Research downgraded NVIDIA's rating last week. Pierre Ferragu, an analyst at New Street Research, stated that NVIDIA has surged rapidly since the beginning of last year and has now exhausted further upside potential, leading to a downgrade from Buy to Neutral. Ferragu wrote that additional upside "will only materialize in a bull market scenario, with significantly increased prospects beyond 2025, but it is uncertain whether this will occur at present."

He added that while "the quality of the franchise remains intact," NVIDIA faces the risk of a downgrade if the current outlook remains unchanged.

NVIDIA rose nearly 240% in 2023 and surged 154% this year, making it the second-best performing company among the S&P 500 index components this year, second only to Super Micro Computer (SMCI.US), which is also a favorite among artificial intelligence investors. The hot streak has increased NVIDIA's market value by nearly $1.9 trillion, briefly making it the world's largest company by market capitalization.

For a company that has become the biggest beneficiary of the artificial intelligence spending boom, an analyst downgrade is relatively rare. Nearly 90% of analysts tracked by Bloomberg recommend buying the stock. However, valuation is often seen as a concerning issue.

NVIDIA's forward 12-month price-to-earnings ratio exceeds 22 times, making this chipmaker the most highly valued stock among the S&P 500 index components by this measure. New Street has set a one-year target price of $135 for NVIDIA, while the stock closed at $125.82 last Friday