Morgan Stanley reiterated its overweight rating on Nvidia on Friday, pointing to the chipmaker's plan to back neo-cloud investment in exchange for revenue sharing as a source of untapped upside. The firm expects the arrangement to split investor opinion but says it sits on the bullish side of that debate.
Morgan Stanley reiterated its overweight rating on Nvidia on Friday. The firm's thesis centers on Nvidia backstopping investment in neo-cloud providers in return for a cut of their revenue.
That trade-off is likely to further polarize the stock, Morgan Stanley says, since investors disagree over how much risk Nvidia takes on by underwriting cloud buildouts it also supplies. In its note on Nvidia, the firm writes: "We are definitively on the optimistic side, seeing a large annuity potential with limited downside."
That view frames the revenue-sharing deals as a recurring income stream for Nvidia rather than a one-off bet. Morgan Stanley's overweight rating on the stock stands unchanged, even as the firm expects the strategy to stay a flashpoint for debate.
Source: US Top News and Analysis
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