Morgan Stanley raises target prices for NVIDIA Corporation (NVDA.US) and Broadcom Inc. (AVGO.US), asserting that AI demand will "substantially" accelerate next year.

Morgan Stanley analysts on Monday raised the target stock prices for NVIDIA Corporation (NVDA.US) and Broadcom Inc. (AVGO.US), pointing out that the strong momentum in artificial intelligence is likely to accelerate substantially next year. The firm increased the target stock price for NVIDIA Corporation from $235 to $250, and for Broadcom Inc. from $409 to $443. Led by analyst Joseph Moore, the analyst team wrote in a report to clients, "We continue to believe that NVIDIA Corporation will maintain a dominant market share, as threats to its market position are overstated, although we are uncertain what might shift market sentiment." "Our models predict that in fiscal year 2026, the revenue growth of AI processors for Broadcom Inc. and AMD (AMD.US) will be slightly faster than NVIDIA Corporation, but this mainly reflects supply chain constraints with revenue reaching $205 billion by 2026 all key products will face supply constraints before 2026." After further analysis, the analysts expressed that the information they obtained from industry contacts left them "unwaveringly" confident that NVIDIA Corporation will have the best economic benefits in most applications. The analysts explained, "The greatest concern for customers in the next 12 months is whether they will be able to procure enough NVIDIA Corporation products, especially the latest Vera Rubin chips." "Of course, everyone wants an alternative, and these alternatives will have good economic benefits in some applications. TPU [Alphabet Inc. Class C's tensor processor] is a reliable alternative from all perspectives and has made significant contributions to the development of several key models. However, it is worth noting that NVIDIA Corporation just achieved quarterly data center revenue of $51 billion, approximately 14 times the revenue of TPU, and achieved $10 billion in sequential revenue growth (approximately 3 times the revenue of TPU)."