A sudden entry into the midst of chaos that caused investors low blood sugar level, entering calmly is Morgan Stanley. Nvidia still being the top pick for them, why? Well, because when the world starts building digital empires powered by AI, you don’t doubt the company that sells the bricks.

As the whole tech sector is still wobbling from the renewed threat of tariffs from Donald Trump, it doesn’t stop Morgan Stanley from bracing Nvidia as its number one pick in the market. The firm notes that even a general sell-off in stock price does nothing to the performance of this chipmaker in the long run because of surging demand, flexible supply chains, and a robust AI market.

Consequences of Tariffs on the Chip

President Trump’s so-called “Liberation Day” tariffs offered temporary refuge to Semiconductors. Morgan Stanley cannot rule out the possibility of chips getting caught-up in the aftermath of trade policies in future. However, if tariffs are implemented on chips, it is believed that fairly minimal “consequences” are likely coming the way of Nvidia, considering its demand for chips, market strength and flexibility in supply chains and in global manufacturing.

Morgan Stanley Analysts said ,

“NVIDIA remains our Top Pick with the undeniably positive GPU data points and an inference market clearly starved for GPUs across multiple hyperscalers. We think sustained AI spend and NVDA’s relative supply chain flexibility will help them outperform, even in a higher tariff environment.”

Demand Outperforms Supply

The company reported quarterly revenue of $39.2 billion in the last financial year with a year-over-year growth of 78%. Jensen Huang, CEO of Nvidia emphasized that the demand for Nvidia’s latest Blackwell Chips is “insane”. The demand for Nvidia’s chips is on the rise, according to Morgan Stanley. This is mainly due to the “tight” capacity for large language learning models to create new predictions and inferences. Such popularity also drives demand for all types of Nvidia products, including older ones like Hopper. Morgan Stanley remarked that most industry contacts are not bothered about the threat of tariffs, since they aren’t worried about the intensity of demand.

The Morgan Stanley analysts said,

“Our industry contacts are generally unconcerned by the tariffs, because demand is strong, Blackwell is sold out, and demand is quite price insensitive.

North American Supply Chain

Contact with the tariffs can also be reduced through an increasingly North American supply chain for Nvidia, given the recent deal of the U.S with Canada and Mexico. The analysts of Morgan Stanley believe that most of the components for Nvidia’s GB200 supercomputing platform are likely to be already in North America. This strategy can assist in avoiding tariff risk, related to Chinese manufacturing.

As per reports, GB200 production in Mexico is being boosted by Hon Hai, one of the major partners. While possibly ZT Systems and other suppliers may set up within the U.S borders. Morgan Stanley also reported an increased production capacity for Bianca boards in Mexico, which is another component of the platform.

Market Volatility Continues

To say that Nvidia’s stock has been halted by the swings of the broader market would be an understatement. The stock fell by 14% following Trump’s April announcements on tariffs, during which the S&P 500 fell only by 10%. Morgan Stanley analysts still believe that the stock’s dip has more to do with the general sentiment of macroeconomic uncertainty than something specifically lacking in its fundamentals. The bank said,

“That said, NVIDIA seems among the more protected companies, and will have minimal direct impact. But the type of recession also matters, as demand for GPUs remains resilient – and we would say risks to that come more from the financing side than from anywhere else.”

No matter how much panic the markets get into, how loud the headlines may become, and how much tariffs are tossed by politicians like confetti, Nvidia’s fundamentals have not shifted. Morgan Stanley are not simply making a gutsy call, they are talking loud about where the smart money is looking within the storm of tariffs. Volatility may be brief, but dominance reign forever with the right kind of strategy.