Morgan Stanley Analyst Joseph Moore renewed coverage on Nvidia, NASDAQ: at Equal Weight and set a price target of $217.00 for each share.

Although Moore acknowledges that Nvidia “remains one of the best growth names in the semis space,” he has concerns related to the high valuation and deceleration in the gaming sector.

“Our approach is to at least maintain a market weighting in the stock, and look for spots for an overweight. A significant decline in gaming should lead to a challenging 2023. However, a strong data center exposure should offset this. We believe that near-term gaming numbers should be solid. We are bullish on the company’s long-term prospects and market positioning, and would hold a market weight position in the stock; we would say that earnings growth will likely be partially offset by multiple compression, but that still should drive upside from here in line with the group; obviously inflation/interest rate concerns have compressed higher multiple names,” Moore wrote in a note to clients.

Net-net, the analyst still sees NVDA stock as “a core holding” but the gaming correction is what makes him stay on the sidelines.

By Senad Karaahmetovic