'Don't Underestimate This AI Giant,' Says Morgan Stanley About Nvidia Stock

Tip Ranks
2025.06.03 06:48
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Morgan Stanley remains bullish on Nvidia (NVDA) stock, maintaining an Overweight rating and listing it as a 'Top Pick.' The firm cites strong quarterly results, robust global demand for AI infrastructure, and improving supply chain dynamics as key positives. Despite geopolitical risks and rising inventory concerns, analysts believe Nvidia is well-positioned to meet demand, with a Strong Buy consensus rating and an average price target of $171.62, indicating a potential upside of 24.92%.

Nvidia's (NVDA) stock continues to draw attention after the chipmaker delivered strong quarterly results, highlighting its dominance in the AI space. Despite concerns about macro pressures and the impact of U.S.-China tensions, the company remains upbeat, pointing to "incredibly strong" global demand for its AI infrastructure. Building on this momentum, Morgan Stanley reiterated its bullish stance on Nvidia, describing the stock as a "unique opportunity" in the semiconductor space.

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The firm maintained its Overweight rating and continues to list Nvidia as its 'Top Pick,' even as broader concerns weigh on the chip sector. It cited strong financial execution, improving supply chain dynamics, and resilient AI demand as key reasons for its optimism.

Key Positives Supporting Morgan Stanley's Bullish View

Nvidia's latest quarterly results stood out across several areas. Morgan Stanley pointed to "gross margins ahead," strong revenue outside of China, and signs of recovery in its networking segment as key positives. The firm also noted "positive commentary" around the company's supply chain, especially as Nvidia ramps up production of AI racks. This suggests the company is in a strong position to meet rising demand.

In addition, Morgan Stanley believes that the demand for Nvidia's products still appears to exceed supply. The analysts at Morgan Stanley said the company is "materially undershipping demand," which leaves room for further growth as supply catches up.

Cautious Outlook amid Geopolitical Risks

Despite its strong performance, Nvidia still faces a few near-term concerns. One concern is the rising inventory among original design manufacturers (ODMs), driven by delays in rack availability. However, Morgan Stanley believes this issue will be short-lived, with sales likely to regain momentum soon.

Another challenge is the limited forward guidance. Nvidia shared little detail about the second half of the year, which the firm sees as a cautious move tied to "geopolitical sensitivity" around China.

What Is a Good Price for NVDA?

Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 36 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $171.62 per share implies 24.92% upside potential.

See more NVDA analyst ratings

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