Morgan Stanley analyst Joseph Moore believes the recent market downturn fueled by DeepSeek, a Chinese AI startup, presents a buying opportunity for Nvidia shares. Moore maintains an overweight rating on Nvidia and sets a $152 price target, indicating 22% potential upside. While acknowledging DeepSeek's potential impact on export controls and long-term AI investment, Moore highlights strong demand for Nvidia's Blackwell and Hopper chips, as well as continued commitment from cloud customers to AI development.
The recent market downturn fueled by concerns about DeepSeek, a Chinese AI startup, has presented a buying opportunity for Nvidia shares, according to Morgan Stanley . Analyst Joseph Moore reiterated Nvidia as a top pick and maintained an overweight rating on the stock in a Thursday note to clients. Moore set a $152 price target for the dominant maker of artificial intelligence chips, indicating approximately 22% potential upside based on Wednesday's closing price.
Moore wrote, 'While sentiment has worsened around potential longer term risks, near term business continues to firm, Blackwell supply visibility continues to build customer desire to spend is clearly on display.' He added, 'We remain very optimistic on how the balance of the year plays out.' Nvidia shares have surged nearly 85% over the past year but experienced a significant drop following the emergence of DeepSeek. This Chinese startup leveraged less-efficient Nvidia chips to create an AI model comparable to OpenAI's ChatGPT, but at a fraction of the cost. DeepSeek purchased 10,000 Nvidia A100 chips, released in 2020 and two generations prior to Nvidia's current Blackwell chip, before the A100s faced restrictions for sale in China in late 2023, according to the Stanford University Cyber Policy Center. The tech sell-off on January 27th resulted in Nvidia plunging 17%, losing a record amount of market value in a single day for any company in history. Nvidia, scheduled to release earnings on February 26th, is currently down more than 6% this year. Moore acknowledges that DeepSeek presents some headwinds regarding export controls and long-term AI investment, but maintains that near-term catalysts remain intact in the form of Blackwell and Hopper chip solutions for Nvidia. Demand for Blackwell remains strong, and Moore cites 'very promising' signals for future demand from CoreWeave's Tuesday announcement that it brought Nvidia's GB200 NVL72 instances to its platform, making it the first cloud service provider to make Blackwell generally available. The analyst also stands by Nvidia based on capital spending commentary from the company's largest customers, which have reaffirmed their AI investment plans. Nvidia's cloud customers, for instance, remain committed to purchasing more GPUs to enhance revenue, he said. 'For the investments that are not generating revenue today there remains an ongoing commitment to advancing the state of the art,' Moore stated. 'Many of the architects of the largest clusters have reiterated a commitment to scaling out large training clusters with no indication that DeepSeek changes that momentum,' he added. Looking ahead, Moore believes the most significant long-term catalyst for Nvidia extends beyond AI training and leverages the company's leadership in the inference market, particularly as inference tasks become more complex. Inference refers to the process where a trained AI model applies its knowledge to new data and makes predictions or decisions based on that data. 'We remain convinced that Nvidia is the biggest beneficiary of long inference workloads,' he concluded
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