Morgan Stanley: NVIDIA Corporation's cloud capital expenditure share continues to increase, new AI applications "are just getting started"

Investment firm Morgan Stanley recently held talks with the management of NVIDIA Corporation (NVDA.US), and after the meeting, several key points were identified, including the tech giant's expanding market share in cloud capital expenditures. Moor maintains a "hold" rating for NVIDIA Corporation and sets its target price at $210. Joseph Moore, lead analyst at Morgan Stanley, stated in a report to clients: "Investors are currently mainly focused on demand, and the confidence of NVIDIA Corporation's management in the short-term and long-term prospects continues to strengthen. Management indicated that the demand growth we are currently seeing is largely driven by revenue increases from the strong growth trend in cloud capital expenditures, mainly reflected in the migration of computing cores from CPUs to GPUs in existing application workloads. This growth trend is expected to continue, but AI applications with broad transformative potential have not yet fully materialized." Furthermore, Moore mentioned that many new AI application areas are just beginning, with fields such as healthcare, legal services, and industrial automation seen as the "next wave of significant growth." The analyst added: "Long-term, Siasun Robot & Automation technology is expected to extend this automation to the physical realm, and new model categories will emerge in every vertical sector. This supports our belief that the AI infrastructure market size will reach $3 trillion to $5 trillion by the calendar year 2030. This figure is higher than our current forecast, but aligns with the view that 'AI will have a transformative impact on global markets'." Moore also pointed out that the recent attention on the "supplier financing" issue arising from NVIDIA Corporation's partnership with OpenAI is more of a "demand accelerator" rather than a "demand creator." Moore explained: "NVIDIA Corporation's investment strategy is to find leverage points that can accelerate innovation. For example, investments in CoreWeave (CRWV.US) and in a sovereign fund in the UK are aimed at accelerating (data center) capacity expansion and innovation processes, which can be extended to other companies in the field in the future." Finally, regarding AMD's increased competitive efforts, especially its partnership with OpenAI, NVIDIA Corporation's management does not seem overly concerned because cloud service providers still highly rely on NVIDIA Corporation to build GPU capacity. Moore added: "Many competitors can develop chips that excel in a single function, but NVIDIA Corporation's full-stack approach and the flexibility of its GPUs provide it with an unassailable leading advantage."