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Nvidia shares surge 12% after strong AMD results, bullish Morgan Stanley forecast
Nvidia (NVDA) shares rose more than 12% on Wednesday following better-than-expected guidance from AMD (OMG) and an upbeat forecast from Morgan Stanley analysts after a more than 20% drop in shares.
AMD’s quarterly results come out on tuesday night has allayed some concerns that the AI business may have run its course as investors have fled Big Tech over the past month. The company beat expectations on both the top and bottom lines and issued a better-than-expected outlook for the third quarter.
Additionally, technology giant Microsoft (MSFT) revealed higher spending on data center infrastructure in your latest quarterly results. AI chip suppliers like AMD and Nvidia could benefit Increased investments by Big Techs.
“The fear that some of this momentum won’t last, or perhaps the fear that the revenue trajectory won’t hold over the next 12 months or so — I think that’s starting to subside,” CFRA senior equity analyst Angelo Zino told Yahoo Finance on Wednesday.
Chip pairs including Broadcom (AVGO), Micron (MU), Taiwan Semiconductor (TSM), ASML (ASML) and Super Micro (SMCI) also recovered on Wednesday.
Nvidia surged nearly 13% on Wednesday as Big Tech continues to spend on AI data center infrastructure. Morgan Stanley’s bullish forecast on the AI chipmaker also lifted the stock.
Nvidia was also boosted Wednesday by a note from Morgan Stanley analysts led by Joseph Moore, who moved the stock to a “Best Pick” after a recent slide from all-time highs reached in June.
The firm wrote that the massive sell-off of approximately 25% of Nvidia shares “represents a good entry point as we continue to hear strong near- and long-term data, with competitive concerns overstated.”
Morgan Stanley cited five main drivers of Nvidia’s recent decline — spending plans, competition, export controls, supply chain fears and valuation concerns — but said: “Through these concerns, the earnings environment is likely to remain strong, for Nvidia and the entire AI complex.”
The firm maintained its Overweight rating and $144 price target on the stock.
Nvidia shares are still up more than 135% this year, outpacing the Nasdaq’s more modest 17% gain. The company is scheduled to release its next quarterly report on Wednesday, Aug. 28.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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