Even with the S&P 500 hitting a new high, Morgan Stanley sees plenty of investment opportunities as the earnings season draws to a close.
In a recent note to clients, the firm highlighted Nvidia (NVDA), EQT Corporation (EQT), Arista Networks (ANET), and Tuya ( TUYA) as their top picks. Here’s a closer look at each stock’s outlook and what analysts are saying.
Nvidia (NVDA) – AI leader with strong upward revisions
Nvidia remains Morgan Stanley’s top AI pick, with analysts confident that the chipmaker will continue to outperform despite concerns about potential long-term risks.
“While sentiment has worsened around potential longer-term risks, near-term business continues to firm,” the firm wrote in a recent note. “Blackwell supply visibility continues to build, and customer desire to spend is clearly on display.”
Oppenheimer analyst Rick Schafer echoes this bullish stance, recently reiterating an outperform rating with a $850 price target, citing stronger-than-expected AI infrastructure spending.
“Demand remains far ahead of supply, particularly for Nvidia’s H100 and next-gen Blackwell chips,” Schafer said. “We expect another beat-and-raise quarter, which will reaffirm Nvidia’s dominance in AI hardware.”
EQT Corporation (NYSE: EQT) – Buy the dip in natural gas
Morgan Stanley sees EQT’s recent pullback as an attractive buying opportunity, reaffirming its overweight rating ahead of earnings on Wednesday.
“The pullback creates an attractive entry point, with valuations now more compelling,” wrote analyst Devin McDermott. “We continue to prefer gas over oil exposure within E&Ps and recommend buying the gas pullback.”
The firm also highlights liquified natural gas (LNG) as a major near-term growth driver, even as concerns over AI’s potential to lower power demand persist.
Goldman Sachs analyst Neil Mehta agrees with the bullish view, maintaining a buy rating and a $48 price target on EQT.
“Natural gas remains fundamentally strong, with structural tailwinds from rising global LNG demand,” Mehta noted. “We expect higher European and Asian gas prices to boost exports and drive upside for producers like EQT.”
Arista Networks (NYSE: ANET) – Data center growth play
Arista Networks, which reports earnings Tuesday, remains a high-conviction pick for Morgan Stanley, with analyst Meta Marshall expecting strong networking demand to support growth.
“Company has beaten revenue by ~300-400bps over the last 3-4 years, about in line with buyside expectations,” Marshall said. “Further multiple expansion likely requires news of additional material customers or advancement on paused trials.”
While fourth-quarter results may not be a major catalyst, the firm sees data center expansion as a key long-term opportunity.
Jefferies analyst George Notter agrees, recently raising his price target on Arista to $300, citing increased hyperscaler spending on AI-driven network upgrades.
“We see continued momentum in Arista’s cloud and enterprise business, driven by higher investments from Meta, Microsoft, and Google,” Notter said.
Tuya (TUYA) – IoT growth and market share gains
Tuya, a China-based internet of things (IoT) and AI company, has been a top performer in 2024, with shares up 66% year-to-date. Morgan Stanley reiterated its overweight rating, citing strong revenue growth momentum and raising its price target to $3 from $2.30.
“We think there is a mismatch between fundamentals and share price,” said analyst Yang Liu. “It leaves significant room for the stock to catch up with value.”
Despite potential tariff risks, Tuya’s expanding overseas IoT demand and cost control improvements position it for further upside, according to Morgan Stanley.
Bank of America analyst Eddie Leung shares a similar view, maintaining a buy rating with a $3.20 price target, citing expanding smart home adoption and IoT integration into AI ecosystems.
“Tuya is one of the few Chinese tech names benefiting from overseas expansion,” Leung said. “With its strong relationships with global electronics manufacturers, we expect further upside in 2024.”