TLDR
- Morgan Stanley elevated Nvidia to its preferred semiconductor investment, highlighting attractive valuation metrics.
- Shares advanced 1.09% to $230.86, approaching the 12-month peak of $236.54.
- The chipmaker approved an extra $150 billion for share repurchases, expanding total authorization to $235 billion through 2028.
- Second-quarter revenue reached $96.22 billion, representing a 106% year-over-year surge and surpassing analyst projections.
- Wall Street consensus stands at “Buy” with a mean price target of $324.14.
Nvidia (NVDA) advanced 1.09% to close at $230.86 on Friday following Morgan Stanley‘s decision to elevate the chipmaker to its top semiconductor investment position. The share price is hovering near its 12-month peak of $236.54.
The upgrade came from analyst Joseph Moore following discussions with CEO Jensen Huang, CFO Colette Kress, and investor relations head Toshiya Hari across meetings in New York and Boston. Moore emphasized the stock’s modest valuation at just 15 times the firm’s fiscal 2028 earnings projection.
For a company positioned at the heart of artificial intelligence infrastructure development, this represents an attractive entry point. Moore observed the multiple could expand if AI-related optimism intensifies, though he stressed such sentiment isn’t necessary for positive stock performance.
Revenue Diversification Beyond Hyperscalers
Moore highlighted a crucial detail frequently overlooked by the investment community. Despite 90% of investor attention concentrating on major hyperscalers and frontier model developers, approximately half of Nvidia’s revenue originates from different sources.
This diversified revenue base encompasses a wider array of AI model developers, Neoclouds, government entities, original design manufacturers, original equipment manufacturers, and enterprise clients. Moore characterized this segment as the faster-expanding portion of the business.
Nvidia maintains partnerships with 80 cloud providers, including 55 located outside the United States. This geographic distribution enables the company to capitalize on opportunities wherever power infrastructure and data center capacity become available.
Morgan Stanley also identified an evolving constraint in AI expansion. The primary limitation is transitioning from semiconductor manufacturing to the pace at which new data center infrastructure can be constructed and funded.
This dynamic favors Nvidia’s competitive position. The investment bank anticipates the company’s 2028 Feynman architecture will increase revenue per gigawatt from $40 billion to beyond $50 billion.
Share Repurchases, Financial Performance, and Insider Activity
On September 28th, Nvidia’s board approved an additional $150 billion share repurchase authorization. Combined with existing programs, total buyback capacity now reaches $235 billion extending through 2028, enabling the company to repurchase as much as 2.8% of outstanding shares.
Such substantial repurchase programs typically indicate management confidence that shares trade below intrinsic value. The announcement’s timing coincides with Morgan Stanley’s renewed optimistic outlook.
Regarding financial results, Nvidia exceeded Wall Street projections last quarter. The company delivered earnings per share of $2.22 compared to the consensus forecast of $2.09, while revenue climbed 106% year over year to $96.22 billion.
Recent insider transactions show some selling activity. Director Mark A. Stevens disposed of 622,239 shares during September at an average price of $231.62, while Executive Vice President Timothy S. Teter sold 30,460 shares at $222.80 through a pre-established trading arrangement.
Institutional shareholders maintain 65.27% ownership of the company. Pension & Wealth Management Advisors Inc. recently expanded its position by 12.7%, currently holding 21,362 shares valued at approximately $4.27 million.
Barclays independently increased its 2027 hyperscaler revenue projection for Nvidia to roughly $401 billion, up from a previous $370 billion estimate. Cantor Fitzgerald maintained an overweight rating with a $350 price objective.
Not all market participants share the same enthusiasm. Some investors are monitoring Nvidia’s financing arrangements with AI customers, which skeptics suggest could create circular revenue patterns, and are evaluating customer creditworthiness.
China’s initiative to develop software compatible with Huawei’s rival AI processors represents another long-term uncertainty. Currently, the analyst community maintains a consensus “Buy” recommendation on NVDA with an average price target of $324.14.
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