Nvidia stock gains after Morgan Stanley says cryptocurrency weakness offers buying opportunity

Nvidia Corp. NVDA, +0.54%shares gained in after-hours trading Monday following a Morgan Stanley upgrade that suggests investors buy the stock amid concerns about a decline in cryptocurrency-mining revenue. In a note released after the bell Monday, Morgan Stanley analysts upgraded the stock to "overweight" from "equal weight," praising Nvidia's opportunity in artificial intelligence.

"It's increasingly clear that all roads lead back to NVIDIA as the most direct beneficiary of trends in machine learning," the analysts wrote. The analysts specifically called out recent weakness in the stock amid concerns that mining on the Ethereum blockchain could move beyond the use of graphics-processing units, which is thought to have increased demand for Nvidia's GPUs last year. The analysts admitted that reduced demand from miners could have an effect on Nvidia revenue in upcoming quarters, but they believe a new gaming cycle and pent-up demand from gamers--who have a hard time getting their hands on Nvidia graphics cards amid the mining boom--will make up for any decline. The analysts have a $258 price target on Nvidia stock, slightly higher than the average price target of $250.89 among 33 analysts tracked by FactSet. Nvidia shares rose about 2% in late trading, after closing at $215.41, and have gained 114.7% in the past year as the S&P 500 index has gained 10.6%.