NVIDIA (NVDA) Poised for Growth Amid AI Demand Surge

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Apr 28, 2025
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Amid macroeconomic challenges affecting U.S. stocks, concerns have arisen about whether the AI boom has peaked, with fears that tech giants might reduce their significant AI investments. However, Morgan Stanley's recent report highlights that demand for AI chips remains robust, driving strong growth. Some investors' belief that the market is entering a consolidation phase is seen as misguided.

Morgan Stanley analyst Joseph Moore noted that statements from OpenAI CEO Altman and Alphabet CEO Pichai indicate a persistent shortage of GPU chips for AI companies. Despite Wall Street's concerns about AI growth stagnation, Silicon Valley is experiencing a surge, with AI token processing increasing fivefold since the start of the year, fueling investment.

NVIDIA (NVDA, Financial) has faced setbacks this year due to trade environment volatility and concerns about reduced AI chip demand following China's DeepSeek model. This skepticism contributed to a sell-off, with NVIDIA’s stock dropping 28% this year. Moore highlighted that NVIDIA's new Blackwell chip saw significant revenue growth, from nearly nothing last October to $110 billion in Q1, potentially exceeding $300 billion in Q2. Morgan Stanley reaffirmed its "overweight" rating for NVIDIA, setting a price target at $160, indicating a 45% upside, and emphasized NVIDIA as a key investment in the AI sector.

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I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.