Morgan Stanley Boosts Nvidia $NVDA and AMD $AMD Price Targets Amid AI Demand Surge

The semiconductor sector is experiencing robust momentum driven by escalating demand for artificial intelligence infrastructure, with Nvidia and Advanced Micro Devices emerging as key beneficiaries of analyst optimism. Recent upgrades in price targets from institutions like Morgan Stanley underscore the potential for substantial returns, as these companies capitalise on expanding data centre investments and computational advancements.

Analyst Perspectives on Nvidia

Nvidia has solidified its position as a dominant force in the graphics processing unit market, particularly through its advancements in AI accelerators. As of 30 July 2025, the company’s stock trades at approximately USD 112.50 per share, reflecting a market capitalisation exceeding USD 2.7 trillion. This valuation follows a year-to-date gain of over 130% from the start of 2025, propelled by quarterly revenues that reached USD 30 billion in the fiscal second quarter ending 27 July 2025, a 122% increase year-over-year.

Morgan Stanley has recently adjusted its price target for Nvidia to USD 200, up from USD 170, while maintaining an overweight rating. This revision highlights the bank’s view of exceptional strength in AI-related demand, with expectations that Nvidia’s Blackwell architecture will drive further market share gains. Comparable optimism is evident across Wall Street; for instance, the consensus price target from 64 analysts stands at USD 227.95, as reported by Public.com on 27 July 2025. This aggregate forecast implies a potential upside of more than 100% from current levels, based on projections of sustained revenue growth in data centre segments.

To contextualise, Nvidia’s data centre revenue alone surged to USD 26.3 billion in the latest quarter, comprising 88% of total sales and marking a 154% rise from the prior year. This performance aligns with broader industry trends, where global AI spending is projected to exceed USD 200 billion annually by 2025. Historical comparisons reveal a stark evolution: in fiscal 2020, Nvidia’s annual revenue was USD 10.9 billion, dwarfed by the USD 96 billion trailing twelve-month figure as of July 2025.

Comparative Financial Metrics

These figures, sourced from Nvidia’s investor relations page, illustrate operational efficiency amid scaling production. Analysts anticipate fiscal 2026 revenues could approach USD 130 billion, assuming continued adoption of AI training models.

AMD’s Role in the AI Landscape

Advanced Micro Devices, while trailing Nvidia in market dominance, is carving out a significant niche through its competitive offerings in central processing units and AI-optimised chips. As of 30 July 2025, AMD’s shares are priced at around USD 138.00, with a market capitalisation of approximately USD 223 billion. The company reported second-quarter 2025 revenue of USD 5.8 billion, up 9% year-over-year, with data centre sales jumping 115% to USD 2.8 billion.

Morgan Stanley has elevated its price target for AMD to USD 185 from USD 121, retaining an equal weight rating. This adjustment reflects confidence in AMD’s ability to capture share in the burgeoning AI processor market, though with a more tempered outlook compared to Nvidia. Broader analyst sentiment shows a consensus target of USD 195, suggesting about 41% upside potential.

AMD’s strategic focus on the MI300 series accelerators has yielded early wins, with management guiding for USD 4.5 billion in AI-related revenue for 2025, revised upward from initial estimates. This compares to USD 1 billion in such sales during 2024. In a macroeconomic context, AMD benefits from diversified exposure across personal computing, gaming, and embedded systems, mitigating risks tied solely to AI hype. For reference, the company’s enterprise segment contributed 48% of Q2 2025 revenue, a shift from 24% in Q2 2024.

AMD Financial Snapshot

Data from AMD’s earnings release indicates resilience despite softness in gaming. Forward projections estimate AMD’s stock could average USD 200 by year-end 2025, contingent on successful execution of its AI roadmap.

Broader Sector Implications

The upgrades for Nvidia and AMD occur against a backdrop of intensifying competition and investment in semiconductors. Global chip sales reached USD 149.9 billion in the second quarter of 2025, a 18.3% increase year-over-year, according to the Semiconductor Industry Association. This growth is fuelled by AI, cloud computing, and electric vehicles, with the Americas market expanding 32.4%.

However, risks persist, including geopolitical tensions affecting supply chains and potential overcapacity if AI adoption slows. Nvidia’s forward price-to-earnings ratio of 38x contrasts with AMD’s 45x, suggesting varied valuations of their growth prospects. Investors should monitor upcoming earnings; Nvidia’s next report is slated for late August 2025, where guidance on Blackwell shipments will be pivotal.

In comparison to peers like Broadcom, which saw its price target lifted to USD 240 by Morgan Stanley in the same note, the sector’s enthusiasm appears widespread. Broadcom’s diversification into networking complements Nvidia’s compute focus, potentially creating synergies in AI ecosystems.

Investment Considerations

For portfolios tilted towards technology, Nvidia offers high-conviction exposure to AI’s secular trends, supported by its 80% market share in AI GPUs. AMD, with its equal weight rating, presents a balanced alternative for those seeking value amid competition. Both firms are well-positioned, but diversification across the supply chain—encompassing foundries like TSMC—could hedge against volatility.

AI-based forecasts, derived from historical revenue patterns and analyst extrapolations, suggest Nvidia’s market cap could surpass USD 4 trillion by 2027 if annual growth sustains at 40%. For AMD, a more conservative 25% compound annual growth rate might yield a USD 400 billion valuation in the same timeframe. These projections assume stable macroeconomic conditions and no major disruptions.

References

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