Morgan Stanley ups Nvidia price target to $144. Here's why

Morgan Stanley analysts are hiking their price target on Nvidia (NVDA) from $116 to $144 per share over the chipmaker's "compelling narrative" within the AI space. The Morning Brief's Brad Smith and Madison Mills review Morgan Stanley's note and the international competition between dominant chip companies.

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This post was written by Luke Carberry Mogan.

Video transcript

Morgan Stanley, hiking its price target on NVIDIA to $144 from $116 and reaffirming their overweight rating, saying it has the most compelling narrative in the A. I and Semiconductor space.

Here there, you're taking a look at the rating, the price target and the logo on screen.

They say they're not pounding the table at these levels, given the sharp appreciation since the last earnings report.

But as they transition ultimately from H 100 to H 200 then Blackwell visit, visibility and backlog will improve materially.

They expect writing in this note.

Yeah, it's interesting, because I I've been speaking with some analysts about the Blackwell chip for another piece that I'm working on.

And there's not transparency from NVIDIA about the cost of each individual chip on each generation.

But the estimate for a Blackwell chip is in the neighbourhood of 35 to over $50,000 per individual chip, and each customer is gonna be buying a heck of a lot more than one of those chips.

And it's all profit margins for NVIDIA.

They're looking at over 75% on the margins here for that product.

So when you think about the fundamentals like that, it's difficult.

Have an argument against the stock.

Having said that, I watched a powerful Tik talk this weekend that reminded me to always look at the risk for every stock story.

So I thought I needed to work that into my own coverage here at Yahoo Finance the risks here, right that the A I chip purchasing could be cyclical, that this could be a one time thing and that all these companies investing in A I could decide.

Actually, we don't really know what to do with this.

So we're going to taper down our investments and just stick with the chips We already have.

See how they work and then come back to this narrative later.

That could hinder NVIDIA's growth Moving forward.

Also, big potential risk here is the geopolitical volatility that we're seeing in the South China Sea.

If we do see any type of invasion of Taiwan, that is where TS MC is located, that is the manufacturer of all of these chips that would be a huge head wind, not just for NVIDIA but for all of the chip makers in the space.

It could be a huge headwind for the chip makers if that geopolitical risk, which is very difficult, obviously to price in, did come to fruition.

So there are some risks to come despite this call.