Morgan Stanley named a new top pick which it called a “unique Nvidia proxy.” That’s Aspeed Technology, a Taiwan-listed fabless chip designer which Morgan Stanley pointed out is the Nvidia’s only supplier of baseboard management controller processors, which are a key component of the tech giant’s artificial intelligence graphics processing unit, GB200. On top of that, the bank added, Aspeed is unlikely to face competition in the near term. “We see Aspeed as a unique NVIDIA-related play, being the sole BMC supplier for GB200 and a key supplier to help realize Omniverse adoption,” said Morgan Stanley analysts in a June 7 note. Omniverse is a 3D graphics collaboration platform that Nvidia created. “We now also see more smart city and smart factory customer wins for Aspeed, including government and semiconductor fab projects. Although the current revenue contribution from non-BMC business accounts for only 10% of total revenue, we expect this to aid the overall gross margin trend,” the bank added. Morgan Stanley said with an average selling price of $100 per chip, it estimates the company could enjoy gross margins of 90%. The positive outlook for cloud capital expenditure is also set to benefit the data center supply chain, according to Morgan Stanley. BMC processors are used in data center equipment. The bank estimates that cloud capital expenditure growth is set to be 44% year on year in 2024, following earnings reports from the big four hyperscalers — Meta , Microsoft , Amazon and Google . Hyperscalers are large-scale data centers that offer massive computing power and carry out much of the cloud computing for AI applications. That expected growth would be a 42-point acceleration from just 2% year-on-year growth in 2023, Morgan Stanley said. The bank increased its price target for Aspeed to 5,150 Taiwanese dollars ($159), implying upside of around 20%. International investors who want to buy the stock can go through their international broker or gain exposure to the stock through exchange-traded funds. The stock makes up 2.2% of the Global X Emerging Markets ex-China ETF. — CNBC’s Michael Bloom contributed to this report.
