NVIDIA Upgraded by Morgan Stanley: The Development of Generative AI Is Too Much of a Megatrend To Get Distracted by Tactical Concerns

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NVIDIA shares hit their local nadir back in October 2022, spurred by persistent weakness in gaming and data center segments. However, the recent hype around OpenAI's ChatGPT and generative AI has flipped that bearish calculus on its head, spurring even professed bears to throw in the proverbial towel.

As a refresher, NVIDIA has jumped onto the "large language model" bandwagon via its AI-as-a-service business model. Under this model, NVIDIA will soon allow cloud-based access to its AI-training supercomputer. Further details are expected to materialize at NVIDIA's upcoming spring GTC in March.

For those who might be unaware, OpenAI's ChatGPT and Google's Bard leverage deep learning via Generative Adversarial Networks (GANs) to create new content that is virtually indistinguishable from human-created content. To do so, GANs use two types of neural networks, where a generator creates new content while a discriminator evaluates that content and then provides feedback to the generator. In this way, GANs progressively self-evolve.

MORGAN STANLEY: “While our views that $NVDA would see tactical numbers challenged in both gaming and data center have largely played out, the development of generational #AI is too much of a megatrend to get distracted by tactical concerns. The stock will .. be hard to ignore ..” pic.twitter.com/66rUXJZb8H

— Carl Quintanilla (@carlquintanilla) March 17, 2023

This brings us to today when Morgan Stanley has upgraded NVIDIA stock to an Overweight rating, pegging a $304 share price target. The new price target constitutes an increase of 19 percent relative to Morgan