Morgan Stanley: Old Huang's ComputeX speech "lacked big highlights," but NVIDIA's strong performance in the second half is "predictable."

Morgan Stanley's Interpretation of NVIDIA's Computex Keynote Speech - Accelerated Growth Expected in the Second Half, AI Communication Infrastructure Becomes a Focus.

According to news from the Chasing Wind Trading Desk, Morgan Stanley pointed out in a report on May 19 that although NVIDIA's Computex keynote speech did not bring many surprises, the path to returning to growth in the second half of the year has become clear. At the same time, several mid-term concerns that have troubled the market are being resolved one by one, including customer digestion cycles, GB200 bottlenecks, and ecosystem collaboration issues. NVIDIA is expected to return to strong growth in the second half of 2025.

The report noted that NVIDIA unveiled several key products and technologies at the Computex conference, the most notable being NVLink Fusion. This is a new variant of NVIDIA's interconnect technology that expands ecosystem compatibility, supporting a wider range of hardware, including custom ASICs and non-NVIDIA CPUs (such as Qualcomm and Fujitsu). Morgan Stanley pointed out that this strategy will increase communication infrastructure revenue, but further assessment is needed regarding its impact on ASIC competition and customer choices (NVLink Fusion vs. the upcoming UAlink).

In addition, the company also launched the RTX PRO server for the enterprise AI inference market, which can be configured with up to 8 Blackwell RTX Pro Graphics 6000 cards and NVIDIA networking technology, fully compatible with AI enterprise software platforms. The robotic foundation model Isaac GR00T was also updated, adding a synthetic data generation framework for humanoid robot training (Isaac GR00T-Dreams). The personal workstation DGX Spark will be launched in July this year, and the DGX Station will be released later this year.

Based on an expected earnings per share of $5.70 for fiscal year 2025 at an approximate 28 times valuation, Morgan Stanley has given NVIDIA an "Overweight" rating and a target price of $160, which is comparable to the valuation of AI peer Broadcom and higher than the overall level of the semiconductor industry. As of Monday's close, NVIDIA has risen over 40% from its low this year to $135.57.

Short-term Challenges vs. Mid-term Growth: Returning to the Growth Track

Morgan Stanley analysts pointed out that NVIDIA currently faces several short-term challenges.

• There is a risk that NVIDIA's sales targets may be reviewed and prohibited by the U.S. Department of Commerce, which is expected to result in potential losses exceeding $5 billion.
• Additionally, the risk of slow shipments of the GB200 chip has somewhat suppressed the stock price.

However, the report stated that several mid-term concerns for NVIDIA are being resolved one by one:

• The customer digestion cycle has stabilized;
• The collaboration ecosystem between cloud providers and LLM providers is being optimized;
• The bottleneck issue of GB200 is easing.

The company also announced a collaboration with Foxconn and Taiwan to build a new supercomputer equipped with 10,000 Blackwell GPUs, with TSMC becoming the main customer for research and development, and plans to establish a new office in Taiwan to further strengthen its ecosystem collaboration