Nvidia slips even as MS restarts coverage, calls it 'one of the best growth names'
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Nvidia (NASDAQ:NVDA) shares slipped on Tuesday even as investment firm Morgan Stanley restarted coverage on the semiconductor company, calling it "one of the best growth names" in the space.
Analyst Joseph Moore put an equal weight rating and a per-share price target of $217, noting that Nvidia (NVDA) has "differentiated" offerings in the cloud and artificial intelligence and a leading position in gaming, but there are concerns about a slowdown in gaming and its high valuation compared to its peers.
"The stock is a core holding; our approach is to at least maintain a market weighting in the stock, and look for spots for an overweight," Moore wrote in a note to clients, adding that a "significant deceleration" in gaming should result in a "modestly challenging 2023."
Nvidia (NVDA) shares slipped more than 0.5% to $193.86 in premarket trading on Tuesday.
In addition, Moore noted that Nvidia's (NVDA) high-performance computing and cloud business is now one of the largest in the industry and its demand drivers are still growing, as evidenced by the Hopper architecture that was recently announced at its GTC conference.
Though the company's gaming business may take a hit due to the aforementioned slowdown, Nvidia's (NVDA) "heavy investment" in ray tracing should allow it to benefit and keep expanding its lead, with its Ada Lovelace products likely to drive "significant enthusiasm," Moore explained.
Bank of America recently said that Nvidia (NVDA) should be among the beneficiaries from strong cloud results seen from Microsoft (MSFT) and Alphabet (GOOG) (GOOGL) last month.