Nvidia Stock Rises. Morgan Stanley Makes the Case for $200.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Nvidia stock was gaining on Wednesday as shareholders look forward to earnings reports from major technology companies.

In midmorning trading, shares were up 1.5% at $178.06. They fell 0.7% on Tuesday.

Morgan Stanley analysts are confident the stock has more to gain, raising their target price to $200 from $170 and reiterating an Overweight rating. The target is based on a price-to-earnings multiple of 33 times the team’s forecast for Nvidia’s 2026 profit.

“We remain enthusiastic on the levels of aggregate demand for [Nvidia’s AI chip] Blackwell as token growth continues to outpace what Nvidia can ship,” wrote analyst Joseph Moore, in a research note on Wednesday.

“Supply bottlenecks will continue to set the pace of growth, but supply is set to improve in the second half, that should accelerate the momentum of EPS [earnings per share] revisions,” he added.

The next catalyst probably will be Microsoft and Meta Platforms earnings, with the tech companies reporting numbers after Wednesday’s market close. Both are major customers for Nvidia.

Investors will be looking for signs that spending on AI infrastructure will keep increasing, as well as indications of whether the tech companies are shifting to in-house chips rather than Nvidia’s hardware.

There are plenty of would-be rivals for Nvidia’s crown. Start-up Groq—not to be confused with Elon Musk’s Grok AI model—is raising $600 million in funding at a $6 billion valuation, according to a Bloomberg report late Tuesday, which cited unidentified sources.

Groq didn’t immediately respond to a request for comment. The start-up specializes in high-speed chips for inference, the process of producing output from AI models. Its highest-profile deal so far has been with Saudi Arabia’s Humain, which also buys Nvidia chips.

Two other chip makers, Advanced Micro Devices and Broadcom were up was up 0.5% and 1%, respectively.

Write to Adam Clark at adam.clark@barrons.com