Reasons for Breakout We Saw on Chart Yesterday? (Patreon)

• NVDA got a PT raise from 255 to 304 - I find it comical when analysts raise targets after previous targets have been surpassed. 
• NVDA also have their Dev conference next week. 
• AI is real

Nvidia (NASDAQ:NVDA) shares rose more than 1.5% in premarket trading on Friday as Morgan Stanley upgraded the GPU maker, with the investment firm noting the artificial intelligence "megatrend" has become too much to ignore.

Analyst Joseph Moore raised his rating on Nvidia (NVDA) to overweight from equal-weight and boosted his per-share price target to $304 from $255, noting that the challenges in gaming and the data center have largely played out, but the development of generative or generational AI will overshadow any other trends.

"The stock will continue to be hard to ignore in an otherwise challenging semiconductor environment," Moore wrote in an investor note.

Moore noted the enthusiasm the firm is seeing for large language models is boosting spending both in the near and long-term, adding that the power of transformers have become clear as products such as ChatGPT and other AI workloads have moved up priority lists and are now seen as "one of the most significant developments in technology since the development of mobile internet."

"The high capital intensity of these workloads, particularly on the training side, is now a major part of the calculus for the largest companies in technology, with NVIDIA having dominance in the training market that is likely to persist for several years even with a relatively fixed number of model developers, model complexity plus multiple languages should still drive 3-5x growth in training over 5 years," Moore added.

Moore also said he "overestimated" the role CPUs will play in large language models. Intel (INTC) is the dominant player in the CPU space, having held 71% of the market, according to Counterpoint Research.