Morgan Stanley Doubles Down on Nvidia: $250 Target Signals 30% Upside Amid AI Arms Race
In a significant vote of confidence for the AI chip leader, Morgan Stanley has reaffirmed its bullish stance on Nvidia (NVDA), maintaining an Overweight rating and issuing a new $250 price target. This target suggests a potential 30% climb from current trading levels around $192, underscoring the firm's conviction even as the stock navigates market volatility.
The analysts outlined a bullish scenario valuing the stock at $330, predicated on flawless execution and sustained demand. Conversely, a bear case of $150 was presented, factoring in the risks of faster-than-expected demand cooling, competitive pressures, and valuation compression.
The endorsement comes during a pivotal week for Nvidia, which saw China approve initial imports of its latest H200 chips and received encouraging signals from hyperscaler capital expenditure plans. Since late January, Nvidia's shares have gained approximately 4%, propelling its market capitalization to a staggering $4.68 trillion.
Morgan Stanley argues the market remains overly focused on perceived overhangs, missing the fundamental strength revealed in their latest checks. The bank identifies Nvidia's upcoming Vera Rubin platform as a key differentiator. Rather than just selling chips, Rubin represents a shift to delivering complete, end-to-end systems—a move that could cut through competitive noise by allowing customers to better gauge true performance and cost of ownership.
"The conversation is moving from components to solutions," said a Morgan Stanley analyst. "Rubin changes the game by offering a fully integrated stack, which simplifies deployment and locks in efficiency."
Furthermore, the transition to Nvidia's next-generation Blackwell architecture is expected to be significantly quicker than anticipated due to superior manufacturability, with board assembly times reportedly dropping from two hours to about five minutes.
The growth engine appears firmly intact, fueled by unabated spending from cloud giants. Recent data points are telling: Microsoft's Q2 2026 capital expenditure surged 66% year-over-year to $37.5 billion, with a majority earmarked for chips and compute. Meta followed suit, guiding 2026 capex to a range of $115-$135 billion, well above analyst expectations. Industry estimates suggest the top five hyperscalers could spend nearly $602 billion in 2026, with Goldman Sachs pointing to a wave of AI investment exceeding $500 billion this year alone.
However, risks loom. Morgan Stanley's bear case highlights the threat from demand normalization, increased competition from AMD's expanding full-stack offerings and custom silicon (ASICs), and geopolitical tensions including export restrictions. These factors could challenge Nvidia's dominant ~85% market share and its current forward price-to-earnings multiple of 42.
Market Voices:
"This isn't just about chips anymore; it's about ecosystem dominance. Morgan Stanley's target reflects the premium the market should pay for that moat," says David Chen, a portfolio manager at Horizon Tech Advisors.
"A $250 target feels like chasing momentum. The valuation already bakes in perfection, and the slightest miss in demand or a stumble against AMD will trigger a painful correction. The bear case at $150 is more realistic than the street wants to admit," argues Sarah Fitzpatrick, a sharp-tongued independent analyst known for her skeptical takes on tech valuations.
"The hyperscaler capex numbers are the real story here. As long as that faucet is on, Nvidia's fundamentals are secure. Rubin is the strategic key to maintaining their pricing power," notes Marcus Wright, a senior editor at The Circuit.
"It's simple arithmetic. The AI infrastructure build-out is a multi-year cycle, and Nvidia is the primary contractor. Short-term volatility doesn't change that trajectory," adds Rebecca Soto, a technology sector strategist.
This analysis is based on a report originally published by TheStreet. Additional context and commentary have been added.