Morgan Stanley analysts wrote after an investor meeting with NVIDIA management
that despite a large market cap and recent relative underperformance, NVIDIA is
still their preferred semiconductor stock. They said AI hyperscale cloud
providers—about half of current data‑center revenue—are exploring custom‑chip
alternatives but NVIDIA "will retain a large portion of that business" and both
standard and custom categories should still grow. Demand from Neocloud,
industrial and sovereign data centers remain strong and the Vera Rubin chip is
expected to ship on schedule. The analysts warned valuation multiples may be
capped by NVIDIA's size and index weight but said they expect the valuation gap
to close over time and wrote, "Our conviction remains strong."
