Shares of Nvidia Corp. are down more than 10% from their record high close because of at least four problems. But Joseph Moore, a Morgan Stanley analyst, thinks that soon, Blackwell will be the only thing that matters for the business.
That’s the company’s new chip, and Moore thinks that by the second half of 2025, investors will only be interested in how well this new product is doing.
“We have been most bullish on Nvidia when the near-term data points look mixed but the underlying dynamics are very strong,” he wrote on Friday. “We believe we are now getting close to that point.” We think there are a lot of worries here, some of which are exaggerated and some of which will cause stress in the short term but won’t matter in the long term.
Moore then talked about the four things that worry Nvidia NVDA +3.08% investors the most right now. One of these worries is about Hopper, the company’s older chip family. It’s not a big deal for us, but it will probably make the news in early 2025 that Nvidia builds are going down, he wrote.
“At some point, building H200s,” which are part of the Hopper lineup, “takes away valuable back end and HBM3e supply that is more productively used for Blackwell,” he said. This makes sense. The HBM3e is a type of high-bandwidth memory.
He wrote about Blackwell that “not all new Blackwell products are ready to ship at the same time.” He’s “hearing anxiety about some of the types that aren’t ready,” so that’s something to keep in mind.
Moore also said that he is not “discounting” differences in time but that he still thinks “all of the Blackwells should get sold, even if this means moving some of them from one customer to another.”
Some people are also worried about more competition from companies that make application-specific integrated circuits, such as Broadcom Inc. AVGO +1.13% and even Amazon.com Inc. AMZN +0.73% After Broadcom gave a positive growth outlook, investors have been worried for the past week or so about whether ASICs will be able to get a bigger part of the AI accelerator market next year. But Moore doesn’t see things the same way.
Based on talks with those customers, he wrote, “In 2025, we think that the biggest users of ASICs will actually see purchases shift back towards GPUs.”
Moore did say that “it remains to be seen” how the market will change in the long run. For goods that haven’t come out yet, it can be hard to make predictions. “But the new features in Blackwell make the bar much higher,” he said.
Moore also said that there are concerns about scaling: “The key technologists driving spending in the largest [artificial general intelligence] “arms race” cluster build-outs are seeing benefit in scaling out cluster sizes, but the financial backers in venture capital or enterprise cloud are raising questions about ROI for those models,” which means “return on investment.”
Moore says that by 2026, he “can’t rule out a consolidation in that portion of the market.” However, he also believes that Nvidia has recently released technology that should make big clusters work better.
Moore said, “That fear and the fear of ASICs may be with us for a while, but Nvidia can certainly make us feel better about them.” He also believes that worries about the timing of the Blackwell product and the slowdowns in the Hopper build could “completely disappear” in the second half of next year.
Moore still thinks that Nvidia will have faster sales growth next year than either Broadcom or Advanced Micro Devices Inc.
AMD +0.28% Friday morning, Nvidia’s stock is up 2%, but it is down 10.7% from its all-time high in early November.
