Morgan Stanley: NVIDIA's share of cloud capital expenditures continues to rise, new AI applications "are just getting started"

According to the Zhitong Finance APP, investment institution Morgan Stanley recently held talks with NVIDIA (NVDA.US) management, summarizing several key points afterward, including the fact that this tech giant's market share in cloud capital expenditure is continuously expanding. Joseph Moore maintained an "overweight" rating on NVIDIA and set a target price of $210.

Led by Joseph Moore, Morgan Stanley analysts pointed out in a report to clients: "Investors are currently mainly focused on demand-side conditions, while NVIDIA management's confidence in short-term and long-term prospects continues to strengthen. Management stated that the demand growth we are seeing now largely stems from revenue increases under the strong growth trend of cloud capital expenditure, primarily reflected in the migration of computing cores from CPUs (central processing units) to GPUs (graphics processing units) in existing application workloads. This growth trend will continue, but truly transformative AI application scenarios have not yet materialized."

In addition, 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: "In the long term, robotics is expected to extend this automation into the physical realm, and new model categories will emerge in every vertical. All of this supports our view that by the calendar year 2030 (CY2030), the AI infrastructure market size will reach $3 trillion to $5 trillion. This figure is higher than our current forecast but aligns with the view that 'AI will have a transformative impact on the global market.'"

Moore also pointed out that the recent "vendor financing" issue, which has drawn widespread attention due to NVIDIA's partnership with OpenAI, is more of a "demand accelerator" rather than a "demand creator."

Moore explained: "NVIDIA's investment strategy is to find leverage points that can drive innovation acceleration. For example, investments in CoreWeave (CRWV.US) and the sovereign fund investment in the UK aim to accelerate (data center) capacity expansion and innovation processes, and these models can be promoted to other companies in the field in the future."

Finally, regarding AMD (AMD.US) increasing competitive pressure, especially with its partnership with OpenAI, NVIDIA management does not seem overly concerned—because cloud service providers still heavily rely on NVIDIA to build GPU capacity.

Moore added: "Many competitors can develop chips that excel in single functions, but NVIDIA's full-stack approach and the flexibility of its GPUs create an unshakeable competitive advantage."