Nvidia (NASDAQ:NVDA) stock surged over 10% on Wednesday, driven by stronger-than-expected guidance from peer AMD (NASDAQ:AMD) and a bullish call from Morgan Stanley analysts after a significant drop in the stock.
AMD’s quarterly results, released late Tuesday, alleviated concerns that the AI sector might be cooling off, as the company exceeded expectations on both earnings and revenue and provided a more optimistic outlook for the third quarter.
CFRA senior equity analyst Angelo Zino noted to Yahoo Finance on Wednesday that fears about the sustainability of revenue momentum are starting to diminish.
AMD and Industry Peers Show Strength
AMD’s stock increased by as much as 6% in early trading. Additionally, other chip industry peers such as Broadcom (NASDAQ:AVGO), Micron (NASDAQ:MU), Taiwan Semiconductor (NYSE:TSM), ASML (NASDAQ:ASML), and Super Micro (NASDAQ:SMCI) also saw gains on Wednesday.
Morgan Stanley Boosts Nvidia’s Outlook
Nvidia’s stock was further boosted by a note from Morgan Stanley analysts, led by Joseph Moore, who upgraded the stock to a ‘Top Pick’ following a recent pullback from record highs reached in June. The firm highlighted that the roughly 25% decline in Nvidia’s stock presents a favorable entry point, noting strong short-term and long-term data despite competitive concerns.
Morgan Stanley identified five main factors contributing to Nvidia’s recent stock decline—spending plans, competition, export controls, supply chain issues, and valuation concerns—but asserted that the earnings environment is expected to remain robust for Nvidia and the broader AI sector.
The firm maintained its Overweight rating and set a $144 price target on Nvidia stock.
Despite the recent volatility, Nvidia shares are up more than 130% this year, significantly outperforming the Nasdaq’s 17% gain. The company is scheduled to report its next quarterly results on Wednesday, August 28.
Featured Image: Megapixl
Author Faith Yakubu 
