On August 1st, according to Cailian Press (editor Huang Junzhi), all chip stocks rose on Wednesday driven by the much stronger-than-expected financial report of AMD in the second quarter and Morgan Stanley's listing of Nvidia as a "preferred stock".

On Wednesday, Eastern Time, the three major indices collectively rose, with the S&P 500 and Nasdaq both achieving the best daily performance since February, led by Nvidia in the chip stocks. At the close, Nvidia rose 12.81%, Broadcom rose 11.96%, ASML rose 8.89%, Qualcomm rose 8.39%, Taiwan Semiconductor rose 7.29%, Micron Technology rose 7.08%, and AMD rose 4.36%.

Previously, AMD released its financial report stating that sales of its artificial intelligence chips continued to be hot. The financial report showed that the company performed well in terms of revenue and profits, and benefited from the increase in AI GPU shipments. The revenue of AMD's data center business unit increased by 115% year-on-year to $2.8 billion. The revenue of this department has continued to hit historical highs for two consecutive quarters, up 80% year-on-year in the previous quarter.

Morgan Stanley's support.

In addition, the main factor driving Nvidia to lead chip stocks is that Morgan Stanley has re-listed Nvidia as a "preferred stock" while maintaining a "shareholding" rating.

Morgan Stanley analyst Joseph Moore and his team issued the latest report on Wednesday stating that they are optimistic about Nvidia's long-term growth potential, and market concerns about it will weaken over time. On Tuesday, Nvidia's stock price fell more than 7%, the largest decline in more than three months, and its market value evaporated by $193 billion.

In the past two weeks, a large number of investors have withdrawn from technology stocks due to doubts about whether AI can bring expected returns. Nvidia, Apple, Microsoft, and Alphabet are all victims, with their stock prices falling sharply.

However, Morgan Stanley believes that recent stock selloffs have provided a good buying opportunity, "because we continue to hear strong short- and long-term data points, as well as excessive competition concerns".

Moore and his team explained that the reason for the stock's decline is because people are worried about factors such as tightening customer capital expenditure budgets, intense competitive situations, export controls, and supply chains.

"Although there are these concerns, the profitability environment of Nvidia and the entire AI comprehensive body may remain strong." They wrote.

Morgan Stanley also stated that Nvidia's data center business will continue to contribute to the company's majority growth in the next five years, especially in the AI/ML (Artificial intelligence / machine learning) hardware solutions. With the launch and delivery of Blackwell superchips, Nvidia is expected to further consolidate its competitive position in the AI field.

Finally, the bank predicts that Nvidia's earnings per share will increase from $1.30 in 2024 to $3.70 in 2027, and the price-to-earnings ratio will drop from 51.0 times in 2024 to 29.7 times.