Morgan Stanley Maintains NVIDIA as Top Pick Amid Chip Demand Surge

Morgan Stanley reiterated NVIDIA as its top semiconductor pick and raised its price target to $200 per share from $170. The analyst noted strong demand for NVIDIA's Blackwell chips, which is outpacing supply, and expects supply constraints to ease in the second half of the year. NVIDIA remains Morgan Stanley's top pick for AI stocks.

Morgan Stanley has reaffirmed NVIDIA as its top semiconductor pick and raised its price target to $200 per share from $170. The analyst noted strong demand for NVIDIA's Blackwell chips, which is outpacing supply, and expects supply constraints to ease in the second half of the year. NVIDIA remains Morgan Stanley's top pick for AI stocks.

The demand surge for NVIDIA's Blackwell GPUs has been driven by enterprise and cloud giants rapidly adopting these chips. According to Morgan Stanley analyst Joseph Moore, the demand is exceptional and already outpacing supply. The Blackwell architecture offers a 40x jump in AI training and inference performance compared to Hopper, making it a significant upgrade for AI workloads [1].

Moore's team updated their 2026 valuation multiple, raising Nvidia’s earnings multiple from 28x to 33x. This shift in valuation, applied to Nvidia’s mid-year earnings estimate of $6.02 per share, helped lock in the $200 target. The analyst also expects Nvidia’s supply chain to improve in the second half of 2025, which could lead to a major boost in output and earnings [1].

The strong demand for Blackwell GPUs is expected to represent a significant portion of Nvidia’s high-end GPU shipments. TrendForce data projects that Blackwell could potentially represent almost 80% of Nvidia’s high-end GPU shipments this year. This represents a massive ramp in product mix, underscoring the fast adoption rate of these chips [1].

The recent operating results from Alphabet, the parent company of Google, also suggest positive news for NVIDIA. Alphabet's Google Cloud segment delivered revenue growth of 32% in the second quarter of 2025, driven primarily by AI demand. The company's order backlog for data center capacity surged to $106 billion, indicating a significant need for AI infrastructure. Alphabet CEO Sundar Pichai increased the company's capital expenditures (capex) forecast for 2025 to $85 billion, further boosting demand for NVIDIA’s GPUs [2].

NVIDIA's stock has soared since the start of 2023, driven by the AI revolution. The company's data center segment is expected to make up around 90% of its total revenue in the current fiscal year 2026. NVIDIA's business could grow even faster than Wall Street expects if other top customers follow Alphabet's lead and raise their capex forecasts, which could fuel additional upside in its stock in the short term [2].

References:
[1] https://m.economictimes.com/news/international/us/nvidia-stock-price-target-2025-morgan-stanley-just-boosted-nvidias-target-heres-why-blackwell-chips-are-game-changers/articleshow/123044159.cms
[2] https://www.nasdaq.com/articles/alphabet-ceo-sundar-pichai-just-delivered-incredible-news-nvidia-stock-investors