- Nvidia (NVDA) is expected to report another beat-and-raise quarter, with Morgan Stanley (MS) projecting roughly $3 billion above consensus estimates and $4 billion in higher guidance.
- The firm raised revenue and EPS forecasts across multiple years, driven by accelerating AI data center demand and the upcoming Blackwell and Rubin product cycles.
- Price target increased to $285 from $260, though analysts caution about potential gross margin pressure from new architecture ramps and higher input costs.
Pre-Earnings Upgrade Signals Confidence
Nvidia is set to report quarterly earnings Wednesday, and Morgan Stanley analyst Joseph Moore is betting on another blowout. In a note to clients, Moore lifted his revenue and earnings-per-share estimates across fiscal years, now projecting faster growth than the Street expects. The revision comes as AI data center spending continues to surge, with hyperscalers and cloud providers ramping up infrastructure deployments.
"Visibility into the supply chain has improved materially," Moore wrote, adding that demand for Nvidia's next-generation Blackwell architecture and subsequent Rubin platform is already building. The firm raised its price target to $285 from $260, implying roughly 17% upside from current levels.
Margin Worries Linger, but Demand Overrides
While the outlook is robust, Moore noted that gross margins could face headwinds as Nvidia transitions to new architectures. Ramp costs for Blackwell and higher input expenses may compress margins in the near term, though strong pricing power and supply visibility are expected to offset much of the pressure.
"The gross margin narrative is a watch item, but the top-line story remains dominant," Moore said. He cited ongoing AI model training and inference workloads as driving sustained demand, with enterprise adoption broadening beyond early adopter hyperscalers.
The company's market capitalization has already surged past $3 trillion, and a strong earnings beat could push shares higher, though some investors are wary of elevated valuations. Nvidia declined to comment ahead of the report.
Product Cycles Drive Long-Term View
Morgan Stanley's multiyear forecast now reflects a more aggressive timeline for Nvidia's product roadmap. Blackwell, expected to ramp in the second half of 2025, and Rubin, slated for 2026, are seen as catalysts that will extend the company's competitive moat. The firm also cited growing contributions from software and networking businesses as margin-accretive over time.
"Nvidia is not just a chip company; it's an AI infrastructure platform," Moore said. "The ecosystem lock-in and full-stack offerings make it difficult for competitors to dislodge."
Still, risks remain. US export controls on advanced semiconductors could impact sales to China, though Nvidia has been able to offer compliant variants. Geopolitical tensions and any pullback in enterprise AI spend could also slow the growth trajectory.
Correction: An earlier version of this article misstated the dollar amount of Morgan Stanley's EPS revision. The firm raised its EPS forecast by approximately $0.15 for fiscal 2026, not $0.50.