AI Demand Skyrockets: A Deep Dive into Semiconductor Stocks AMD, NVDA, and INTC by Morgan Stanley

Morgan Stanley analyst Joe Moore highlights that semiconductor earnings reinforced his view that the shift in spending towards AI, combined with high cloud inventories, is deflating the unit economy of cloud and servers for semiconductors.
He notes that Cloud demand ex-AI is materially weakening.
In his view, NVIDIA Corp NVDA (with an Overweight rating and a price target of $304) is likely to have the best results, which is a singularly unhelpful statement given the valuation premium - the threat to NVIDIA's stock price will likely be very high expectations, rather than business deceleration.
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As far as Advanced Micro Devices, Inc AMD (with an Overweight rating and a price target of $97) is concerned, he thinks that the financial modeling leads to unease persisting into 2Q, but with the emerging AI story (the AI opportunity looks to be multiples of his initial assessment), this remains Joe's Top Pick in the compute space.
Intel Corp INTC (with an Equal-weight rating and a price target of $31) should see recovery through the year, though he sees a minimal near-term upside. Joe remains cautious about memory.
Price Actions: NVDA shares traded lower by 1.39% at $281.74 on the last check Friday. AMD shares traded lower by 2.72% at $94.45.
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