NVIDIA's stock surges on increased target price and new AI chip orders

NVIDIA shares surged over 1% to $177.68, following a Morgan Stanley target price increase from $170 to $200 and an "overweight" rating. The company also reportedly ordered 300,000 H20 AI chips from TSMC to meet growing demand in the Chinese market.

NVIDIA (NASDAQ:NVDA) shares surged over 1% to $177.68 on July 2, 2025, following a significant upgrade in its price target by Morgan Stanley. The investment bank raised its target for NVIDIA stock from $170 to $200, maintaining an "overweight" rating on the stock [1]. The upgrade reflects strong demand for NVIDIA's AI chips and robust financial performance.

Morgan Stanley cited continued strong demand for NVIDIA's AI chips, particularly the Blackwell architecture, which has seen token growth outpacing supply. This demand aligns with NVIDIA's remarkable 86% revenue growth over the past twelve months, supported by a robust 70% gross profit margin [1]. The investment bank increased its 2026 MW EPS multiple from 28x to 33x, basing the new $200 price target on $6.02 MW EPS.

Additionally, NVIDIA has ordered 300,000 H20 AI chips from TSMC to meet growing demand in the Chinese market. This order emphasizes China's appetite for American AI hardware, even with less power than chips available in the US [2]. NVIDIA developed the H20 to compete with Huawei, a chipmaker based in China, and the US bars companies from selling US technology to Huawei. The H20 is much slower than NVIDIA's H100 and H200 AI chips, which are available to customers outside China. Despite this, NVIDIA sold an estimated 1 million H20s in 2024 and is on track to sell more this year [2].

The order for 300,000 H20 AI chips from TSMC underscores NVIDIA's commitment to serving the Chinese market, which remains a significant driver of growth for the company. The move also highlights the ongoing tension between the US and China over access to cutting-edge technology, with the US attempting to prevent China from acquiring advanced AI chips [2].

In other developments, Morgan Stanley also raised its price targets on four other AI chip stocks, including Astera Labs, Broadcom, AMD, and Marvell Technology, reflecting growing enthusiasm for AI semiconductors [3]. The investment bank's upgrades reflect the long-term strength in the AI semiconductor business and accelerating demand for AI chips, particularly from cloud customers and consumer internet companies.

These developments highlight the strong demand for NVIDIA's AI chips and the potential for continued growth in the AI semiconductor sector. As NVIDIA continues to meet demand and expand its market reach, investors may find opportunities in the company's stock.

References:
[1] https://www.investing.com/news/analyst-ratings/morgan-stanley-raises-nvidia-stock-price-target-to-200-from-170-93CH-4159764
[2] https://www.extremetech.com/computing/chinas-appetite-for-nvidia-h20-ai-chips-expands
[3] https://www.investors.com/news/technology/nvidia-stock-ai-chip-peers-price-target-hikes/