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Nvidia (NVDA, Financial) has been reaffirmed by Morgan Stanley as a top pick for 2025, with an Overweight rating and a $166 price target. While there are near-term challenges of slowing down in Hopper builds and delayed Blackwell product varieties, analysts led by Joseph Moore believe these challenges are transitional.
By the second half of 2025, Blackwell's strength will be precisely what Morgan Stanley expects will dominate the discussion. The firm also addressed competitive pressures from ASIC providers like Marvell (MRVL, Financial). Due to a shift back to GPUs among the largest ASIC users, I am calling for Broadcom (AVGO, Financial) and MRVL) to increase exposure to the related NVLSI group. Over the next year, Nvidia expects GPUs to earn more money than ASICs, and it credits its $12bn annual R&D investment as a key component in maintaining leadership in AI hardware.
The scaling of the Artificial General Intelligence (AGI) clusters is still a big market challenge as financial backers lack ROI concerns. But Nvidia's ideas, including those of Mellanox and NV-Link, hope to overcome obstacles while being efficient. 70% of its data center revenue comes from the company's core growth drivers: inference, sovereign AI training, and enterprise applications, which provide it with the ability to continue growing even in the event of what could be market consolidation by 2026.
When Supply Chain Management is operating well, positive momentum at CES (the Consumer Electronics Show) in January 2025 will be fuelled by Nvidia CEO Jensen Huang's keynote. Strong demand for Blackwell GPUs is forecasted, although supply constraints persist. Morgan Stanley said Blackwell's performance could drive significant revenue growth in the second half of 2025 and unlock additional upside for Nvidia.
This article first appeared on GuruFocus.