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Technology Stocks : NVIDIA Corporation (NVDA)
NVDA 542.16+2.5%11:46 AM EDT

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From: Sam11/25/2019 2:03:42 PM
   of 1662
 
NVDA is up to over $220 at the moment.

Nvidia Stock Is Gaining After a Morgan Stanley Upgrade. Here's What the Analyst Sees. -- Barrons.com
DOW JONES & COMPANY, INC. 8:08 AM ET 11/25/2019


Symbol Last Price Change
210.89 0 (0%)
QUOTES AS OF 04:15:00 PM ET 11/22/2019


Nvidia (NVDA) stock is trading higher early Monday after Morgan Stanley semiconductor analyst Joseph Moore upped his rating on the chipmaker to Overweight from Equal Weight, with a new price target of $259, from $217, citing improving sales prospects for both gaming and data center applications.

"Both gaming and data center fell short of expectations over the course of 2019, and we were surprised at how well the stock was doing in light of that," Moore writes in a research note. "But the stock has not meaningfully outperformed the robust semiconductor group, and as we look into 2020, we see catalysts for Nvidia's(NVDA) growth accelerating on nearly every vector, even in what we expect will be a tough semiconductor environment -- ray tracing software support should generate more gamer enthusiasm in gaming products, and new data center workloads around conversational AI should lead to another leg of data center growth."

Moore concedes that the stock is pricey on near-term earnings, and says he had held back on turning more bullish on the theory that January quarter consensus estimates were too high -- but adds that the observation while accurate " didn't give us the pullback/entry point that we had hoped for."

The analyst writes that he sees "upside from here." Concludes Moore: "All semiconductor stocks are at a premium multiple on 2020 earnings, but across the group we see Nvidia(NVDA) as having one of the best opportunities to maintain a high multiple as we shift to 2021."

The analyst expects 18% growth in the company's gaming business in 2020 after "an investment year" in 2019, with " double digit potential growth thereafter."

In the data center, he sees Nvidia's(NVDA) business roughly doubling over the next three years, as investment increased in machine learning and artificial intelligence applications.

"The company remains nearly unchallenged in its key [machine learning] training market, maintains high market share in emerging areas such as inference, and is leading the way in new growth opportunities such as traditional machine learning analytics," he writes.

NVDA early Monday is up 2.5%, to $216.23, while S&P 500 futures have advanced 0.2%, Dow Jones Industrial Average futures have risen 0.2%, and Nasdaq Composite futures have gained 0.3%.

Write to Eric J. Savitz at eric.savitz@barrons.com
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