Morgan Stanley says buy these five stocks soon that are set to rally
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 31 2025
0mins
Should l Buy NVDA?
Source: CNBC
Morgan Stanley's Top Stock Picks: Morgan Stanley highlights several stocks with significant growth potential, including Nvidia, Seagate, Coupang, and Nubank, emphasizing their strong market positions and favorable valuations.
Seagate and Coupang Insights: Analysts note Seagate's undervalued status in the data storage sector and Coupang's robust market share gains amidst competition, both companies showing promising growth trajectories.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 175.750
Low
200.00
Averages
264.97
High
352.00
Current: 175.750
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Nvidia Projects $1 Trillion AI Revenue by 2027
- Revenue Surge Expected: Nvidia projects its AI revenue to reach $1 trillion by 2027, a significant increase from the $500 billion expected this year, indicating strong growth potential in the AI market that may attract more investor interest.
- Strong GPU Sales: In Q4 of fiscal 2026, Nvidia reported sales of $68.1 billion, a 73% year-over-year increase, with the data center segment contributing $62.3 billion, up 75%, showcasing the company's sustained competitiveness in a high-demand market.
- New Product Launch: At the GTC conference, Nvidia unveiled NemoClaw, designed to provide AI agents for OpenClaw, demonstrating the company's innovative capabilities in agentic AI, which could further drive its market share growth.
- Market Capitalization Changes: Despite Nvidia's stock being down 15% from its all-time high, resulting in a market cap loss of approximately $1 trillion, CEO Jensen Huang emphasized that AI will be a crucial growth driver for the company, potentially prompting investors to reassess its investment value.
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Nvidia Anticipates Massive Growth in Data Center Spending
- Data Center Spending Forecast: Nvidia anticipates that global data center capital expenditures will reach $3 trillion to $4 trillion by 2030, indicating strong demand for AI technology and significant market potential that could drive substantial revenue growth for the company.
- Capital Expenditure Trends: By 2026, the big four hyperscalers are expected to spend $650 billion, excluding expenditures from China and other major AI players, highlighting the increasing reliance on Nvidia's products in the market.
- Industry Growth Rate: Nvidia projects a 48% compound annual growth rate (CAGR) for the industry, and if this rate continues through 2030, the company's revenue could reach $1.53 trillion, significantly surpassing the $216 billion generated in the past 12 months, showcasing its potential market leadership.
- Investor Confidence: While Nvidia is considered a top stock pick, it was not included in the Motley Fool's current list of best investment stocks, reflecting differing market perceptions about its future performance, prompting investors to carefully assess risks and opportunities.
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- Rate Policy Stability: The Federal Reserve decided to keep the Fed Funds rate unchanged during its March 18 meeting, disappointing market expectations for looser monetary policy, which may lead to investor concerns about future AI project financing costs.
- Capital Expenditure Impact: AI infrastructure capital expenditures are projected to reach $3 trillion to $4 trillion annually by 2026, and if rates do not decrease, the rising cost of borrowing could hinder companies' investment decisions in AI.
- Stock Valuation Pressure: With the Fed's decision not to cut rates, AI stocks may face valuation pressures, particularly for unprofitable companies like C3.ai and SoundHound AI, whose future earnings expectations will be more adversely affected.
- Investor Strategy Adjustment: Despite the unpredictability of the Fed's policies, savvy investors should focus on holding quality companies to navigate the uncertainties brought by interest rate changes, thereby achieving long-term compounding growth.
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Iran Threatens U.S. Tech Giants' Investments Amid Regional Conflict
- Escalating Attack Threats: Iran's Revolutionary Guard Corps has already targeted Amazon's data centers, indicating serious threats to U.S. tech companies operating in the Middle East, which may force these firms to either increase spending to maintain operations or consider withdrawing from the region.
- Investment Context: Despite the attacks, Amazon continues to expand in the Middle East, planning a $5.3 billion investment in Saudi Arabia by 2026, and has established data centers in Bahrain and the UAE in 2019 and 2022, respectively, demonstrating its long-term commitment to the market.
- Microsoft's Capital Expenditure: Microsoft plans to invest $15.2 billion in the UAE by the end of 2025, while its capital expenditures for fiscal 2026 are projected to reach $145 billion, indicating that its Middle East investments are relatively small but still part of its global expansion strategy.
- Nvidia's Revenue Potential: Nvidia's agreements to sell AI accelerators in Saudi Arabia are expected to generate between $15 billion and $20 billion in revenue through 2029, yet its revenue for fiscal 2026 is projected at $216 billion, suggesting that its overall business growth remains largely unaffected by the situation in the Middle East.
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- Portfolio Diversity: The Vanguard Total Stock Market ETF (VTI) holds over 3,500 stocks, providing access to a broader range of U.S. publicly traded companies compared to the S&P 500, although it remains heavily influenced by large-cap tech stocks.
- Tech Stock Concentration: With a market-weighted structure, VTI allocates approximately 36% to the technology sector, where Nvidia, Apple, and Microsoft account for over 6%, 5.9%, and 4.4% respectively, indicating higher risk exposure during market fluctuations.
- Earnings Expectations Rise: Despite concerns over a slowdown in AI investments, analysts have generally raised earnings estimates for major tech companies, with Nvidia trading at a forward P/E of 21.4, reflecting strong growth potential in earnings and revenue.
- Investment Strategy Consideration: For investors seeking overall market exposure, VTI is a viable option; however, due to its heavy reliance on a few tech stocks, investors should consider whether they prefer a more diversified investment vehicle like the Invesco S&P 500 Equal Weight ETF.
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The Right Order for Portfolio Construction
- Portfolio Foundation: Starting with the Vanguard Total Stock Market ETF as the core of the portfolio, which includes approximately 3,500 U.S. stocks and has an expense ratio of just 0.03%, allows investors to leverage the long-term power of compounding for stable growth while providing broad market exposure and potential returns.
- International Stock Allocation: After establishing the core, adding the Vanguard Total International Stock ETF gives exposure to overseas developed and emerging markets, helping to reduce reliance on the U.S. market, especially with the rebound in international stock performance expected in 2025 and 2026, enhancing participation in the global economy.
- Value of Dividend Stocks: The Vanguard Dividend Appreciation ETF targets companies that have paid and increased dividends for at least 10 consecutive years; while its 1.6% yield may not be exciting, it enhances the portfolio's defensive nature by providing a stable income stream and quality assurance, ensuring long-term growth potential.
- Stability from Bonds: The Vanguard Total Bond Market ETF covers nearly the entire fixed income space, including U.S. Treasuries and investment-grade corporate bonds, making it suitable for investors looking to reduce overall portfolio risk, particularly as they approach retirement, helping to protect the wealth they have built.
See More
Nvidia Projects $1 Trillion AI Revenue by 2027
- Revenue Surge Expected: Nvidia projects its AI revenue to reach $1 trillion by 2027, a significant increase from the $500 billion expected this year, indicating strong growth potential in the AI market that may attract more investor interest.
- Strong GPU Sales: In Q4 of fiscal 2026, Nvidia reported sales of $68.1 billion, a 73% year-over-year increase, with the data center segment contributing $62.3 billion, up 75%, showcasing the company's sustained competitiveness in a high-demand market.
- New Product Launch: At the GTC conference, Nvidia unveiled NemoClaw, designed to provide AI agents for OpenClaw, demonstrating the company's innovative capabilities in agentic AI, which could further drive its market share growth.
- Market Capitalization Changes: Despite Nvidia's stock being down 15% from its all-time high, resulting in a market cap loss of approximately $1 trillion, CEO Jensen Huang emphasized that AI will be a crucial growth driver for the company, potentially prompting investors to reassess its investment value.
See More
Nvidia Anticipates Massive Growth in Data Center Spending
- Data Center Spending Forecast: Nvidia anticipates that global data center capital expenditures will reach $3 trillion to $4 trillion by 2030, indicating strong demand for AI technology and significant market potential that could drive substantial revenue growth for the company.
- Capital Expenditure Trends: By 2026, the big four hyperscalers are expected to spend $650 billion, excluding expenditures from China and other major AI players, highlighting the increasing reliance on Nvidia's products in the market.
- Industry Growth Rate: Nvidia projects a 48% compound annual growth rate (CAGR) for the industry, and if this rate continues through 2030, the company's revenue could reach $1.53 trillion, significantly surpassing the $216 billion generated in the past 12 months, showcasing its potential market leadership.
- Investor Confidence: While Nvidia is considered a top stock pick, it was not included in the Motley Fool's current list of best investment stocks, reflecting differing market perceptions about its future performance, prompting investors to carefully assess risks and opportunities.
See More
Federal Reserve Holds Rates Steady, AI Investment Outlook Pressured
- Rate Policy Stability: The Federal Reserve decided to keep the Fed Funds rate unchanged during its March 18 meeting, disappointing market expectations for looser monetary policy, which may lead to investor concerns about future AI project financing costs.
- Capital Expenditure Impact: AI infrastructure capital expenditures are projected to reach $3 trillion to $4 trillion annually by 2026, and if rates do not decrease, the rising cost of borrowing could hinder companies' investment decisions in AI.
- Stock Valuation Pressure: With the Fed's decision not to cut rates, AI stocks may face valuation pressures, particularly for unprofitable companies like C3.ai and SoundHound AI, whose future earnings expectations will be more adversely affected.
- Investor Strategy Adjustment: Despite the unpredictability of the Fed's policies, savvy investors should focus on holding quality companies to navigate the uncertainties brought by interest rate changes, thereby achieving long-term compounding growth.
See More
Iran Threatens U.S. Tech Giants' Investments Amid Regional Conflict
- Escalating Attack Threats: Iran's Revolutionary Guard Corps has already targeted Amazon's data centers, indicating serious threats to U.S. tech companies operating in the Middle East, which may force these firms to either increase spending to maintain operations or consider withdrawing from the region.
- Investment Context: Despite the attacks, Amazon continues to expand in the Middle East, planning a $5.3 billion investment in Saudi Arabia by 2026, and has established data centers in Bahrain and the UAE in 2019 and 2022, respectively, demonstrating its long-term commitment to the market.
- Microsoft's Capital Expenditure: Microsoft plans to invest $15.2 billion in the UAE by the end of 2025, while its capital expenditures for fiscal 2026 are projected to reach $145 billion, indicating that its Middle East investments are relatively small but still part of its global expansion strategy.
- Nvidia's Revenue Potential: Nvidia's agreements to sell AI accelerators in Saudi Arabia are expected to generate between $15 billion and $20 billion in revenue through 2029, yet its revenue for fiscal 2026 is projected at $216 billion, suggesting that its overall business growth remains largely unaffected by the situation in the Middle East.
See More
VTI ETF Investment Analysis and Market Outlook
- Portfolio Diversity: The Vanguard Total Stock Market ETF (VTI) holds over 3,500 stocks, providing access to a broader range of U.S. publicly traded companies compared to the S&P 500, although it remains heavily influenced by large-cap tech stocks.
- Tech Stock Concentration: With a market-weighted structure, VTI allocates approximately 36% to the technology sector, where Nvidia, Apple, and Microsoft account for over 6%, 5.9%, and 4.4% respectively, indicating higher risk exposure during market fluctuations.
- Earnings Expectations Rise: Despite concerns over a slowdown in AI investments, analysts have generally raised earnings estimates for major tech companies, with Nvidia trading at a forward P/E of 21.4, reflecting strong growth potential in earnings and revenue.
- Investment Strategy Consideration: For investors seeking overall market exposure, VTI is a viable option; however, due to its heavy reliance on a few tech stocks, investors should consider whether they prefer a more diversified investment vehicle like the Invesco S&P 500 Equal Weight ETF.
See More
The Right Order for Portfolio Construction
- Portfolio Foundation: Starting with the Vanguard Total Stock Market ETF as the core of the portfolio, which includes approximately 3,500 U.S. stocks and has an expense ratio of just 0.03%, allows investors to leverage the long-term power of compounding for stable growth while providing broad market exposure and potential returns.
- International Stock Allocation: After establishing the core, adding the Vanguard Total International Stock ETF gives exposure to overseas developed and emerging markets, helping to reduce reliance on the U.S. market, especially with the rebound in international stock performance expected in 2025 and 2026, enhancing participation in the global economy.
- Value of Dividend Stocks: The Vanguard Dividend Appreciation ETF targets companies that have paid and increased dividends for at least 10 consecutive years; while its 1.6% yield may not be exciting, it enhances the portfolio's defensive nature by providing a stable income stream and quality assurance, ensuring long-term growth potential.
- Stability from Bonds: The Vanguard Total Bond Market ETF covers nearly the entire fixed income space, including U.S. Treasuries and investment-grade corporate bonds, making it suitable for investors looking to reduce overall portfolio risk, particularly as they approach retirement, helping to protect the wealth they have built.
See More
