Morgan Stanley Reiterates Overweight Rating on Nvidia, Calls It a "Unique Opportunity"

Morgan Stanley reaffirmed its Overweight rating on Nvidia (NASDAQ:NVDA), emphasizing the company's exceptional positioning in the semiconductor space despite ongoing macro and sector-specific concerns. The firm also continues to rank Nvidia as its top pick in the chip sector.

“Business Will Accelerate From Here”

In a research note, Morgan Stanley analysts stated:

“This still seems like a unique opportunity to us. The largest market cap semiconductor company in the world is making a strong case that business will accelerate from here, while there is still significant anxiety—almost consensus—that conditions will decelerate.”

This optimism is based on Nvidia's strong recent performance, which beat expectations on:

• Gross margins

• Revenue ex-China

• Recovery in networking

• Supply chain ramp, especially for racks

The absence of forward guidance for the second half of 2024 or calendar 2026 was attributed to geopolitical tensions involving China. Despite this, analysts believe Nvidia is "materially undershipping demand," hinting at robust underlying fundamentals.

Rack Bottlenecks to Ease

Morgan Stanley also addressed a common concern regarding rising inventory levels among original design manufacturers (ODMs) caused by rack bottlenecks. The firm believes this is a short-term hurdle:

“That rack bottlenecks are causing inventory to build up at the ODMs… will soon be replaced by tight supply of those Bianca cards as rack bottlenecks are cleared and demand strengthens.”

Positive on Peers: Marvell and Broadcom

While Nvidia remains Morgan Stanley's standout choice, the firm also expressed bullish views on:

• Marvell (NASDAQ:MRVL): Upgraded sentiment due to recent stock weakness

• Broadcom (NASDAQ:AVGO): Anticipating strong earnings this week

For investors seeking valuation and growth metrics on Nvidia and its peers, the Ratios (TTM) API offers updated profitability and valuation insights, while the Earnings Historical API can help track past earnings trends.

While market anxieties linger, Morgan Stanley's confidence in Nvidia reinforces the view that AI-led chip demand remains one of the most resilient and high-growth narratives in tech.