11:47 AM EST, 02/06/2025 (MT Newswires) -- NVIDIA's ( NVDA ) short-term business remains strong, with both Hopper and all versions of Blackwell showing positive signs despite challenges presented by DeepSeek, Morgan Stanley said in a note Thursday.

The analysts said Hopper demand has been somewhat weaker until recently, but industry checks suggest that demand is firming up in this area. They believe export controls, especially in medium-tier countries, are a factor. They added that although the environment is still transitional, this is a sign of growing confidence. Demand for Blackwell is strong across all versions, with more focus initially on non-rackscale solutions.

The analysts said that while investor sentiment around large training clusters is currently under pressure, there are clear signs that large clusters are still being built. Many of the key players involved in the largest Artificial General Intelligence clusters have reaffirmed their commitment to expanding large training clusters, with no indication that DeepSeek is changing this trend.

"We think the reason Application-Specific Integrated Circuit, or ASIC, has outperformed post DeepSeek is based on a growing emphasis on cost to serve, and a view that ASIC is better equipped to be that low-cost inference platform at many of Nvidia's ( NVDA ) customers. We certainly do believe there's a strong case to be made for an optimized product being better suited for specific workloads. But from what we can observe, it is Blackwell, not ASIC, shifting the cost curve in 2025," the analysts said.

Morgan Stanley reiterated NVIDIA ( NVDA ) as a top pick. The firm has an overweight rating and a $152 price target on the company.

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