- Morgan Stanley upgraded NVDA to Overweight.
- Investment bank raised price target to $304.
- AI megatrend should cause heavy demand for H100 chips.
- Nvidia stock breaks above $260 resistance.
Nvidia (NVDA) stock moved ahead in contrast to the market sell-off on Friday morning. NVDA shares rose 1.8% to $260, its highest price in nearly a year, after Morgan Stanley upgraded shares of the chip designer due to overwhelming optimism regarding demand for its chips in light of the artificial intelligence (AI) "megatrend".
The market was less excited though as negativity surrounding the bank-led bailout of First Republic Bank (FRC) and the quadruple witching day led futures to drop. NASDAQ futures were a bit better than its counterparts at -0.3%, while Dow futures tanked -0.7%.
Nvidia stock news: Analyst places NVDA price target at $304
Morgan Stanley analyst Joseph Moore surprisingly changed his rating from Equal-weight to Overweight. This is surprising since Nvidia stock has already run up more than 90% in the past six months. Moore also raised the Nvidia price target to $304 from the prior $255 – a 19% raise.
Moore's reasoning targeted Nvidia's central place in the future of artificial intelligence computing. Arguing that the semiconductor industry's weakness in gaming and data center would largely be forgotten by the second half of the year, Moore said the AI megatrend was likely to become an extremely large part of Nvidia's growth story over the next few years.
"The high capital intensity of these [AI] workloads, particularly on the training side, is now a major part of the calculus for the largest companies in technology, with NVIDIA having dominance in the training market that is likely to persist for several years even with a relatively fixed number of model developers, model complexity plus multiple languages should still drive 3-5x growth in training over 5 years," Moore wrote.
Already on Monday Microsoft (MSFT) unveiled its new AI virtual machines, which allow customers to test AI protocols without resorting to purchasing the extremely expensive and large amount of hardware required. Microsoft utilizes Nvidia's H100 Tensor Core GPUs, as well as its Quantum-2 InfiniBand networking architecture.
CEO Jensen Huang, who has been championing Nvidia's edge on the future of AI computing for years, will be among the major speakers at next week's GTC Nvidia conference for developers. The conference runs from March 20th to 22nd, and the market is expecting more new announcements to come from the event.
Nvidia stock forecast
Nvidia stock has been able to overcome long-term resistance at $260. This resistance stems from all the way back in November of 2021 and again in early 2022. The latter time period also gave rise to the importance of $266 and $283.50. Both of those price levels worked as resistance one year ago during separate range highs. Bulls will now attempt to reach both levels, but first they will need to contend with an overheated Relative Strength Index (RSI). NVDA stock is back above the 70 overbought threshold on the daily RSI, like it was in late January and early February. Expect a pullback at some point in the next two weeks. Nvidia traders will discover long-term support at $225.
NVDA daily chart
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