Has Nvidia (NASDAQ:NVDA) stock peaked? That’s the big question as the centerpiece of the artificial intelligence movement has fallen into correction territory. Over the past month, the stock is down by about 12% as competition creeps in and customers think of more specific solutions to unique challenges. While the stock is still up by more than 160% for the year, the question is whether the rally is done going by recent week’s pullbacks.
According to Morgan Stanley’s semiconductor analyst Joseph Moore, there is no need for alarm as Nvidia’s (NASDAQ:NVDA) long-term prospects remain intact and the recent pullback has only made the stock attractive. When you think of 2025 and artificial intelligence, the story is all about Blackwell, Nvidia’s (NASDAQ:NVDA) flagship chip. Elaborating, Moore said:
“I think the stock is very attractive at this level. I am not going to say absolute bottom, because it is relative. It is very attractive at this level and I think you are trading at a very much lower multiple than some of the AI peers. I really believe that they are gaining share versus custom silicon in 2025.”
Moore expects Nvidia (NASDAQ:NVDA) to continue gaining share with its Blackwell chip in 2025 owing to its strong product cycle. The analyst expects the stock to trade upwards of $150. The race to $150 a share is more than assured as the chip giant remains a key supplier of graphic processing units and artificial intelligence technologies.
Photo by Christian Wiediger on Unsplash
Nvidia’s (NASDAQ:NVDA) long-term outlook hinges on its being a key supplier of GPUs and AI software solutions to big industry players. The likes of Google, Amazon, Microsoft and Meta Platforms rely on it to supply key chips used in powering data centres to handle and process huge troves of data.
While a deep roster of GPUs has been the spark behind Nvidia’s (NASDAQ:NVDA) ascent to becoming a $3 trillion dollar company, Blackwell is the catalyst expected to take the company to new heights in 2025. Its edge as the next-generation GPU stems from its ability to offer capabilities and features for training and inference of heavy data workloads. It also boasts more sophisticated generative AI applications, making it a preferred option for tech giants.
Blackwell’s demand is so high that it is sold out for the next 12 months. The strong demand hints at the revenue Nvidia (NASDAQ:NVDA) should expect as hyperscalers look for generative AI chips to power the proprietary large language models. Morgan Stanley expects Blackwell’s sales to fall between $5 billion and $8 billion in the fourth quarter.
While Blackwell is expected to provide impetus for Nvidia (NASDAQ:NVDA) stock, headwinds from China could pose significant challenges. The US has already restricted the company’s ability to export chips and other technologies into China. The restrictions affect the sale of the company’s high-performance GPUs, including A100 and H100, and custom chips created for the Chinese market, including H800.
According to Moore, the export control measures imposed by the US will affect Nvidia’s (NASDAQ:NVDA) ability to target the Chinese market.
“They are pretty limited in terms of what they can do in China. They have a product called H20, which meets the US export control thresholds. They have done pretty reasonable volumes of that product. But we will see that taper off just because those export control thresholds are so far below the state of the art of what Blackwell is going to be able to do, that we are just going to see a slowdown regardless,” added Moore.
Amid the restrictions in China, Nvidia (NASDAQ:NVDA) should be able to target clients in other markets. Consequently, the tariffs that the next US administration is likely to impose may not have a significant direct impact.
Our research director also shared his views on NVDA’s earnings results here. He thinks NVDA stock can reach $170 within 3 months. While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article was originally published at Insider Monkey.
Hedge Fund Resource Center