Nvidia shares surge 12% following robust AMD results and optimistic outlook from Morgan Stanley

Nvidia’s Strong Rally: A Sign of Opportunity in the AI Chip Sector

Nvidia (NVDA) stock experienced a notable rally of over 12% on Wednesday, driven by positive guidance from its competitor AMD (AMD) and a bullish call from analysts at Morgan Stanley. This surge comes after a 20% decline in Nvidia’s stock price, indicating renewed investor confidence in the company.

AMD’s quarterly results, which surpassed expectations on both the top and bottom lines, provided reassurance that the AI trade is still viable. Moreover, tech giant Microsoft (MSFT) disclosed increased investments in data center infrastructure, a move that will benefit AI chip suppliers like AMD and Nvidia.

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Analysts, like Angelo Zino from CFRA, noted that concerns about the sustainability of momentum in the AI sector are beginning to subside. This positive sentiment extended beyond Nvidia, as chip peers such as Broadcom (AVGO), Micron (MU), Taiwan Semiconductor (TSM), ASML (ASML), and Super Micro (SMCI) also saw gains on Wednesday.

Morgan Stanley’s analysts, led by Joseph Moore, upgraded Nvidia to a ‘Top Pick’ status, citing the recent pullback from all-time highs in June as a buying opportunity. They highlighted key drivers of Nvidia’s decline, including spending plans, competition, export controls, supply chain fears, and valuation concerns. Despite these challenges, Morgan Stanley believes the earnings outlook for Nvidia and the broader AI complex remains strong.

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As of now, Nvidia’s stock has surged over 135% this year, surpassing the Nasdaq’s more conservative 17% increase. Investors are eagerly awaiting Nvidia’s next quarterly report on August 28th to gauge the company’s performance and future prospects.

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