Morgan Stanley Raises Nvidia Stock Estimates

Investing.com — Morgan Stanley (NYSE:MS) has adjusted its stock estimates for Nvidia (NASDAQ:NVDA) ahead of the company's upcoming earnings report. Although supply constraints persist, the firm expects another strong quarter for Nvidia, with significant upward revisions likely later in the year.

Supply Constraints and Sales Outlook

The analysis indicates that Nvidia's new products, particularly Blackwell, face full supply constraints, which may limit upside potential for the current quarter and outlook. Nevertheless, analysts predict that sales of Blackwell could nearly reach $5-6 billion in the January quarter, slightly below earlier expectations but higher than the implied number.

“It’s hard to read this with any precision, as the month-on-month ramp is steep – a one-week pull in our push out has a meaningful impact,” analysts led by Joseph Moore observed.

Product Demand Trends

On the demand front, Morgan Stanley notes weaker interest in the H100, while the H200 shows increased demand. This trend is consistent with past quarters where Nvidia surpassed guidance by about $2 billion and forecasted sequential growth.

For the January quarter, consensus estimates stand at $36.5 billion, and Morgan Stanley expects Nvidia may guide slightly higher, still hampered by supply constraints.

Gross Margin Expectations

The firm also predicts improved gross margins for Nvidia in October, despite an anticipated decline beginning with the initial Blackwell rollout in January. The chipmaker had projected a decrease in gross margin from 75.7% in July to 75.0% in October, which Morgan Stanley considers conservative.

They believe that costs related to the Blackwell launch won't recur, and minimal mix-related challenges are expected in October. However, analysts caution that the ramp-up of Blackwell and related products could yield immature yields and margin uncertainties.

Long-Term Projections

Morgan Stanley has increased its Nvidia estimates for the second half of 2025, raising revenue, non-GAAP gross margins, and non-GAAP EPS forecasts for FY26 to $176.78 billion, 73.8%, and $4.03, respectively, compared to previous estimates of $166.9 billion, 73.7%, and $3.78.

This revision has also elevated Nvidia's price target from $150 to $160, based on a 42x multiple of the firm’s forward earnings per share estimates for 2025.

Nvidia stock remains Morgan Stanley's top pick. The bank views this quarter as transitional and not a major catalyst for the stock, while reaffirming an Overweight rating, anticipating that the Blackwell cycle will significantly contribute to growth in the second half of the year.