Nvidia (NASDAQ:NVDA) is in focus this morning after the Magnificent Seven leader pulled back in Tuesday trading and is falling again today. The stock’s recent weakness has caused NVDA stock to enter “correction territory,” according to the Street’s traditional view of the latter term. But a Morgan Stanley analyst is defending the shares on weakness this morning and raising his price target on the chipmaker to $1,000.
Nvidia Stock Is Undergoing a Correction
The shares are now down about 11.5% from their all-time high of $950, and the Street traditionally defines a correction as a downturn of 10% to 20%. Therefore, based on longstanding criteria, NVDA stock is undergoing a correction.
Among the reasons for the pullback are worries about competition from a number of Nvidia own major customers that are developing their own artificial intelligence (AI) chips. Illustrating the latter trend, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) earlier this week unveiled a number of its own AI chips and noted that it would sell “the most powerful version” of those products to its own customers.
Moreover, as I pointed out in a recent column, other major chipmakers have also released viable alternatives to Nvidia’s offerings, while some of its customers are reportedly reselling its chips. The latter development suggests that Nvidia’s product inventories are starting to become excessive.
Morgan Stanley Defends NVDA Stock
Morgan Stanley analyst Joseph Moore increased his price target on the shares to $1,000 this morning, citing Nvidia’s ability to benefit from the large investments that the biggest cloud providers will make in AI.
As an example of the latter trend, the analyst noted that Microsoft (NASDAQ:MSFT) intends to spend $100 billion on data centers. Moreover, Meta (NASDAQ:META) appears poised to invest “billions of dollars” on Nvidia’s AI chips this year.
The shares have fallen 7% in the last month, but they have still risen 70% so far this year.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
