Nvidia: Here's why Morgan Stanley raised its price target on the stock

And joining us now, the analysts behind that call, Joseph Moore from Morgan Stanley. Good to have you on why is now the moment to double down on NVIDIA? Well, I think they're in a strong position. You know, we continue to see very robust spending in AI. And I think the debate in the last two or three months has been, will we see a pause in front of this next generation product, this product called Blackwell that starts ramping towards the tail end of this year. And our conviction is growing that we just won't see that pause. We were just in Taiwan and China and did a series of checks where we looked into some of particularly some of the Chinese products that's that's rolling out the H20. We expect that to be quite strong. But but essentially we see a strong business trend going into the Blackwell launch and then we see very robust demand on Blackwell that should persist through most of 2025. How did you go from 116 to 144 on your price target? How much momentum and guess work on the actual price target is there when it's so richly valued versus fundamental bottom up analysis? Yeah, I mean, we've had this incredible move in the stock the last year and a half and yet the multiple is in the same range where it has been. You know, most of this has been earnings growth. So we sort of see we, we use numbers that include stock compensation, we're using a low 40s multiple. That's kind of the high end of the range that we've seen over the last three or four years for NVIDIA on a forward basis. And I think given the fact that we're at this point where visibility is actually probably the lowest it's going to be in the next 12 months with new products starting to ramp that are going to give us more visibility. My sense is that's pretty reasonable. You know, so as incredible as this move in the stock has been, it's really been justified by the move in earnings so far. And I think the key question going or it is how sustainable is that moving earnings? I want to go back to the comments you made about the H20 builds from the Taiwan side, the H20 demand from the China side. I mean, we've seen NVIDIA D risking it's China book of business in part because the tensions and the trade dynamics between the US and China continue to grow. And that seems to be a dynamic that's happening no matter who wins the election this fall. Although I guess devils in the details, but how meaningful is China and the demand from China to NVIDIA these days when you have global sovereigns and you have enterprise companies taking up so much of the attention? You know, as you say, they really have not been shipping to China under the export controls. And when we look at H20, this is a product that is significantly below the performance of their mainstream product, H 100. And so there's been some question in our mind how how strong that demand would be because it is a very competitive segment and we talked to several customers in China did hear that there's very robust demand and that people are getting good returns from that. So I don't think it's going to be a big multi year growth driver unless the export controls clear up. However, I think for the next three or two or three quarters in particular, I think this really helps us to to bridge the gap until Blackwell starts to ramp. So it it it is quite strong and it is across multiple Chinese customers who would certainly prefer to buy Opera or next generation Blackwell but can't in the age 20 is appears to be a very strong alternative for them.