As technology continues its relentless march forward, companies in the artificial intelligence sector find themselves at both the forefront of innovation and the epicenter of market speculationOne such company that consistently garners attention is NVIDIA, known for its pioneering efforts in graphics processing units (GPUs) and a player in the AI fieldRecently, Morgan Stanley analysts reiterated their bullish stance on NVIDIA, designating it as their preferred stock, identifying a recent sell-off triggered by concerns regarding AI technology, particularly in relation to DeepSeek, as a rare buying opportunity for investors.

The analyst team, led by Joseph Moore, strategized and unveiled a target price of $152 for NVIDIA shares in a report released on February 6, a staggering 21.8% increase from its closing stock price at the timeFollowing the publication of this report, the market reacted positively, with NVIDIA’s stock experiencing a rise of over 3% by the week’s end

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This upward trend reflects a broader investor sentiment buoyed by optimism surrounding NVIDIA’s overarching business outlook.

Despite growing investor anxiety regarding potential long-term risks associated with AI regulations and market entrants like DeepSeek, Moore noted that the fundamentals of NVIDIA’s short-term business remain robustAs supply visibility for Blackwell chips strengthens and customer demand becomes increasingly evident, Morgan Stanley asserts that NVIDIA stands tall as their favored choice, regardless of the headwinds faced amid evolving regulatory landscapes.

The analysts from Morgan Stanley acknowledged that while the DeepSeek incident introduces some friction particularly in export controls, it is but one of the many significant evolutionary upgrades within the AI terrainNVIDIA's Chief Executive Officer has previously stated a remarkable achievement: over the last decade, the company managed to enhance processor-level AI performance by an astounding million-fold, with aspirations for a similar accomplishment in the next ten years

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This ambitious trajectory suggests that although short-term disruptions may occur, such as market fluctuations triggered by DeepSeek concerns, they are unlikely to thwart NVIDIA’s pronounced performanceIndeed, the anticipated market adjustments could even be seen as a natural occurrence in a rapidly evolving industry.

Furthermore, Morgan Stanley's analysts maintain a particularly optimistic outlook for NVIDIA’s balanced growth toward 2025, emphasizing four principal supportive factors that underpin their bullish sentiment.

Firstly, the confidence surrounding Hopper and Blackwell chips is expected to continue escalatingWhile we are currently in a transitional phase, anticipation for these chip developments remains high, with analysts foreseeing a resurgence of positive evaluations with the conclusion of the current fiscal quarterEven with a decrease in demand for Hopper chips recently, industry surveys indicate a pronounced rebound on the horizon

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Export control concerns may drive this resurgence as affected regions take preventative measures that may act as a catalyst for demandNonetheless, optimism surrounding these cutting-edge technologies remains firmly intact.

Secondly, substantial investment into the construction of large training clusters is still underway despite prevailing investor sentiments pressing down on investment enthusiasmComments from NVIDIA’s primary clients regarding capital expenditures reaffirm a commitment to their investment trajectories, suggesting that any demand-supply mismatch present in the short term remains a persistent factorNVIDIA's cloud clients operate under a clear revenue algorithm: as they purchase more GPUs, their earnings naturally riseEven in instances where immediate revenue generation is deferred, clients show unwavering dedication to advancing the forefront of technologyArchitects from several of the largest AGI clusters have reiterated their commitment to expanding these massive training setups, showing no signs that concerns introduced by DeepSeek might derail this ambitious venture.

Thirdly, analysts view the inference market as a catalyst for prolonged growth, with NVIDIA firmly entrenched in its position

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While the inference market poses a deflationary trend compared to the training sector, analysts indicate a market inclination toward selecting solutions that deliver peak performanceNVIDIA’s more budget-friendly inference solutions are swiftly accommodating this shift towards the more comprehensive training versions provided by Hopper and the now-released BlackwellThey hold firm belief that NVIDIA stands to benefit significantly from long-term inference workloads, reassuring stakeholders of their remarkable positioning in that realm.

Lastly, understanding the stock market's fluctuating preferences is crucialAnalysts predict a potential reversal in favor of GPUs over ASICs in the latter half of 2025, despite the current trend seemingly favoring ASICsThey foresee an acceleration of revenue growth for NVIDIA in the GPU sector during this period, while the ASIC market may not witness a corresponding surge

Each market is on a viable growth trajectory; however, analysts are convinced there is a larger opportunity for NVIDIA to regain favor within the investment community as sentiment shifts.

Despite the short-term strength of ASICs following the rise of DeepSeek, Morgan Stanley analysts maintain that the underlying economic value of NVIDIA's Blackwell architecture is set to reshape cost expectations across the boardThey recognize that while ASICs can serve niche roles in specific workloads, the comprehensive capabilities and flexibility offered by NVIDIA’s GPU solutions allow continued adaptation across varying applications, from cloud computing to onboard training and inference workloads.

NVIDIA remains committed to evolving its software stack, offering continuous updates free of charge to clients, ensuring significant performance enhancements over timeEven in an economic climate where AI capital expenditures may tighten, analysts anticipate NVIDIA grabbing market share, especially when compared with prior iterations of ASIC products