Morgan Stanley is saying this morning that Nvidia’s (NASDAQ: NVDA) dominant positions in the artificial intelligence and gaming markets are unmatched.
The bank raised its rating for Nvidia's shares to overweight from equal-weight, predicting the chipmaker will report profits above expectations in its fiscal 2019.
"In addition to longer-term data investment trends, we see shorter-term drivers in gaming offsetting crypto weakness, and progress in data center inference [machine learning] expanding the long-term opportunity," analyst Joseph Moore wrote in a note to clients.
Moore reiterated his $258 price target for Nvidia shares, representing 20% upside from Monday's close.
The analyst estimates Nvidia will generate fiscal 2019 earnings-per-share of $6.76 versus the Wall Street consensus of $6.27.
Nvidia shares are up 120% over the past 12 months through Monday compared to the S&P 500's 11% gain. This morning, they were ahead $8.94, or 4.2%, to $224.35.
"We now believe that developments in hardware and software have positioned NVIDIA to capture a higher portion of Inference, key to the long term growth rate," he wrote.
"Strength in gaming titles, and a new NVIDIA product cycle, should drive growth while minimizing the negative impact of cryptocurrency mining economics moving to zero."
In March, the big story was that Adobe (NASDAQ:ADBE) and NVIDIA set up a strategic partnership to rapidly enhance their industry-leading artificial intelligence and deep learning technologies.
The collaboration will speed time to market and improve performance of new Sensei-powered services for Adobe Creative Cloud and Experience Cloud customers and developers.
