Source: Wall Street Journal
Morgan Stanley maintains its overweight rating on NVIDIA with a Target Price of $170, expecting its revenue in the European market to grow 8 times or more from 2024 to 2026. Additionally, quantum computing and industrial/physical AI applications also provide new growth momentum. Furthermore, Morgan Stanley emphasizes the significant acceleration of inference workloads, expecting the top four clients to deploy 3.6 million Blackwell chips by 2025.
Yesterday, Jensen Huang delivered a speech at the GTC conference, with Morgan Stanley strongly supporting it. $NVIDIA (NVDA.US)$ They stated that the three major engines will provide additional growth momentum, maintaining an overweight rating and a target price of $170, indicating about 20% growth potential, and listing it as a preferred stock in the semiconductor sector.
According to news from the Trend Trading Desk, Morgan Stanley released the latest research report after attending NVIDIA's GTC developer conference held in Paris, highlighting that, in addition to a robust acceleration in basic expectations for the second half of the year, three new growth drivers have emerged: Europe's catch-up in AI data center investment, opportunities in quantum computing, and industrial/physical AI applications will provide incremental momentum for NVIDIA.
Morgan Stanley emphasizes that their enthusiasm for the stock is primarily based on the significant acceleration of inference workloads. The company indicated at the GTC conference in March that the top four cloud customers have deployed 1.3 million Hopper chips in 2024 and are expected to deploy 3.6 million Blackwell chips (1.8 million chips) in 2025.
Analysts believe that since March, these figures for all four customers have accelerated. A power capacity of 5GW corresponds to a demand for about 2 million Blackwell chips, slightly higher than the number all four major U.S. cloud service providers ordered, as stated at the March GTC conference. This translates to an estimated $70 billion GPU investment and a total of about $100 billion in investments.
Morgan Stanley sees everything accelerating: rack supply is in place, transitioning to GB300, inference demand, physical AI training, and sovereign AI demand are all growing simultaneously. They believe that management is highly confident in the outlook for the next few quarters, and this growth is expected to gradually manifest on a quarterly basis, presenting a more optimistic view than providing a 12-month forecast.
AI investment in Europe has significantly accelerated, with a surge in GPU demand.
Earlier this year, the European Union launched a €200 billion AI investment plan, which includes €20 billion for funding the construction of five AI super factories (each equipped with over 0.1 million GPUs). The plan announced by NVIDIA will require "over 3000 exaflops of NVIDIA Blackwell computing power."
Morgan Stanley stated that specific deployments include:
The first phase deployment of 18,000 GB200 in cooperation with France's Mistral, which will expand to multiple locations next year.
The 14,000 Blackwell development project in collaboration with Nebius and Nscale in the United Kingdom.
Collaboration with partners like Domyn and telecom companies such as Swiss Telecom, Telefonica, Norway Telecom, Fastweb, and Orange.
Creating the "world's first industrial AI cloud" for European manufacturers, equipped with 0.01 million Blackwell GPUs.
Additionally, NVIDIA provided financial estimates data at the conference: the installation of GPU chips is expected to triple in 2025 compared to 2024, and be ten times higher by 2026 over 2024.
Morgan Stanley analysts assume that in 2024, the entire year will use Hopper chips at $0.022 million each, and by 2026, all will use Blackwell chips at about $0.018 million each, meaning that revenue in the European market can grow eightfold or more from 2024 to 2026, with a growth rate exceeding 150% in 2026.
The path to quantum computing is gradually becoming clear.
In his speech, CEO Huang Renxun stated that quantum computing is reaching a critical turning point and will become powerful enough in the coming years to "solve some interesting global problems."
Morgan Stanley mentioned that Huang Renxun has shown a more positive attitude towards quantum computing, especially regarding NVIDIA's opportunities to sell classical computing technology that simulates and ultimately complements quantum computing.
He reiterated previous comments about the Industry nearing a turning point and clarified that while he believes the timeline beyond the Noisy Intermediate-Scale Quantum (NISQ) era will not be faster, he is more optimistic about the timeline for achieving commercial applications for GPU/QPU hybrid systems.
Physical AI and industrial applications have become the NEW FOCUS AUTO.
Additionally, the conference focused on the next wave of activities in physical AI and industrial AI. Even though humanoid robots need time to develop, relevant investments are actively being made. The focus is on creating Digital Twins for manufacturing and warehousing planning using Omniverse, driving new technologies, and physical training for robots.
Editor/jayden
