Morgan Stanley analysts see a positive setup for Nvidia (NASDAQ:NVDA) going into its upcoming quarterly report, citing industry checks that show "the significant enthusiasm we've seen from AI adopters has translated into reacceleration for data center product," as they reiterate an "Overweight" rating and $304 price target on the shares.
The analysts note that despite recent price gains - shares are up nearly 40% in the past 3 months - the positive momentum in the business may not be priced in yet, given that "last quarter's data center results largely underwhelmed, and that the business had been decelerating on a sequential basis for the last couple quarters."
They believe the "H100 and the return of A100" should be driving the growth through Q1 and onwards with past negatives now "in the rearview mirror."
As such, Morgan Stanley analysts remain bullish on the GPU and chip giant ahead of the earnings release, as they "see an opportunity for the company to reaccelerate growth in the gaming business and see tailwinds from 40-series product through the year," and models revenue growth "at 21.6% CAGR from 2022-2027."
They also advise investors to be on the watch for "outlook for data center card business," as well as any indications of "early traction with cloud offering," seeing those as potential positive catalysts for the stock.
Morgan Stanley reiterates an "Overweight" rating and $304 Price Target (NYSE:TGT) on the shares ahead of the upcoming report.
The company is expected to post results on Wednesday, May 24th. The analyst estimate EPS of $0.91 on revenue of $6.51 billion.