Morgan Stanley analyst Joseph Moore resumed the research coverage on Nvidia (NASDAQ:NVDA) at Equal Weight with a $217.00 per share price target.
Although Moore acknowledges that Nvidia “remains one of the best growth names in the semis space,” he has concerns related to the high valuation and deceleration in the gaming sector.
“Our approach is to at least maintain a market weighting in the stock, and look for spots for an overweight. We model a significant deceleration in gaming that should result in a modestly challenging 2023, offset by a robust data center exposure, though we think near term gaming numbers should remain solid. We are bullish on the company's long-term prospects and market positioning, and would hold a market weight position in the stock; we would say that earnings growth will likely be partially offset by multiple compression, but that still should drive upside from here in line with the group; obviously inflation/interest rate concerns have compressed higher multiple names,” Moore wrote in a note to clients.
Net-net, the analyst still sees NVDA stock as “a core holding” but the gaming correction is what makes him stay on the sidelines.
By Senad Karaahmetovic