Background on NVIDIA and its Relevance
NVIDIA is a leading technology company specializing in graphics processing units (GPUs) and artificial intelligence (AI). Their products are widely used in gaming, data centers, and professional visualization markets. NVIDIA’s expertise in AI has positioned them as a key player in the rapidly growing AI industry.
Morgan Stanley’s Price Target Increase
On Friday, NVIDIA’s stock price surged 4.30% following Morgan Stanley’s upward revision of its fiscal year 2027 revenue and earnings estimates. The investment bank cited the increasing global demand for AI inference workloads, especially in large language models.
- Morgan Stanley raised its estimated revenue for fiscal year 2027 to $255,500 million from $230,900 million.
- The adjusted earnings per share forecast was increased to $6.01 from $5.37.
Analyst Joseph Moore attributed the upward revision to sustained growth in NVIDIA’s data center segment and a strong acceleration in AI inference usage.
Growing Demand for AI Inference Chips
Despite macroeconomic concerns and supply chain issues, the demand for AI inference chips is rapidly increasing. This growth is fueled by a global shortage affecting major AI models worldwide.
- OpenRouter and internal checks show a fivefold increase in AI token generation since the start of the year, indicating significant infrastructure stress.
- Prominent technology voices like Sam Altman (CEO of OpenAI), Sundar Pichai (CEO of Alphabet), and Elon Musk (CEO of Tesla) have highlighted the rising use of AI workloads in recent days.
Moore emphasized that the rebound is driven by revenue-generating applications rather than speculative training activity, providing a positive signal for NVIDIA’s business fundamentals.
Potential Threats
Analysts from Piper Sandler warn that a new advanced AI chip from Huawei could pose a short-term threat to NVIDIA.
- Huawei plans to start mass shipments of its AI processor, the 910C, to Chinese clients as early as next month.
- The 910C represents an architectural evolution rather than a technological leap, offering performance comparable to NVIDIA’s H100.
Some 910C shipments (known as Ascend) may have already taken place, according to Reuters.
NVIDIA’s Challenges in 2025
According to The Motley Fool, NVIDIA has faced a difficult year in 2025. Since the start of the year, its stock has dropped over 30%, resulting in more than a $100 billion loss in market capitalization.
However, NVIDIA’s data center revenue continues to grow rapidly, particularly in AI-related sectors.
Investors seeking a rebound should be cautious, as up to 30% of NVIDIA’s revenue could be at risk this year due to the ongoing US-China trade war.
NVIDIA’s troubles began with the conflict between the two nations and the release of China’s DeepSeek AI.
Key Questions and Answers
- Q: What led to the recent rise in NVIDIA’s stock price? A: Morgan Stanley raised its fiscal year 2027 revenue and earnings estimates for NVIDIA, citing growing global demand for AI inference workloads.
- Q: What concerns do analysts have about NVIDIA’s future? A: Analysts from Piper Sandler warn that Huawei’s new advanced AI chip could pose a short-term threat to NVIDIA.
- Q: How has NVIDIA performed in 2025? A: Despite a 30% drop in stock price since the beginning of the year, NVIDIA’s data center revenue continues to grow rapidly, especially in AI-related sectors.
- Q: What factors are driving the increasing demand for AI inference chips? A: Despite macroeconomic concerns and supply chain issues, the demand for AI inference chips is rapidly increasing due to a global shortage affecting major AI models worldwide.
