Nvidia (“NVDA”), a leading chip maker, has seen a remarkable surge in its stock price this year, driven by the growing excitement around artificial intelligence (AI). Since January, the stock has soared nearly 190%, significantly contributing to the success of the S&P 500 and Nasdaq. However, recent market activity has been sluggish. Despite a 3.9% increase on Monday, the shares have declined by over 10% since reaching a peak in late July. Analysts at Morgan Stanley, led by Joseph Moore, attribute this drop to macro concerns and supply anxieties.
Despite the recent dip, Moore’s team believes that now is a prime opportunity to buy Nvidia stock, even naming it their top pick ahead of the company’s upcoming quarterly earnings announcement. With a Buy rating and a price target of $500, which implies a 23.5% gain from Monday’s opening price below $405, Morgan Stanley is confident in Nvidia’s future prospects. The consensus among analysts surveyed by FactSet also favors a Buy rating, with an average price target above $515.
Nvidia is scheduled to release its earnings report on August 23, and Morgan Stanley anticipates exceptional results and an optimistic outlook. The team at Morgan Stanley believes that despite supply constraints, Nvidia will surpass expectations and deliver a strong performance not only for this quarter but also for the next 3-4 quarters. They consider Nvidia to be their preferred pick, given the significant shift in AI-focused spending and the ongoing supply-demand imbalance.
In summary, the recent selloff presents an attractive entry point for investors considering Nvidia stock. The abundance of positive factors suggests that Nvidia is well-positioned for continued growth in the increasingly AI-driven market.
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