Investing.com — Morgan Stanley (NYSE:) raised its Nvidia (NASDAQ:) inventory estimates forward of the corporate’s earnings report subsequent week. Regardless of provide constraints, the agency anticipates one other sturdy quarter for Nvidia, nevertheless, it believes that extra important upward revisions will happen later within the yr.
The evaluation notes that Nvidia’s new merchandise, significantly Blackwell, are absolutely supply-constrained, which might restrict the upside for the present quarter and outlook.
Nonetheless, Morgan Stanley analysts count on that gross sales of Blackwell might attain near $5-6 billion within the January quarter, which is above the implied quantity however barely decrease than expectations from a number of weeks prior.
“It is exhausting to learn this with any precision, to be clear, because the month-on-month ramp is so steep – a one-week pull in our push out has significant impression,” analysts led by Joseph Moore mentioned in a notice.
By way of product demand, the agency notes that whereas demand for the H100 is weaker, the H200 is seeing stronger curiosity. This sample aligns with earlier quarters the place Nvidia has surpassed steering by roughly $2 billion and guided for sequential development.
For the January quarter, consensus estimates are at $36.5 billion, and Morgan Stanley predicts that Nvidia might information barely increased, albeit constrained by provide points.
The Wall Road agency additionally forecasts higher gross margins for Nvidia in October, regardless of the preliminary Blackwell ramp anticipated to come back at decrease margins beginning in January. The chipmaker had beforehand guided for a gross margin decline from 75.7% in July to 75.0% in October, which Morgan Stanley views as conservative.
They anticipate that the prices related to the preliminary Blackwell rollout won’t be repeated, and minimal mix-related headwinds are anticipated in October.
“That mentioned, the ramp of Blackwell and related merchandise all brings immature yields and a little bit little bit of margin uncertainty, so we’d count on the corporate to nonetheless warning for additional gross margin headwinds,” analysts added.
Morgan Stanley has raised its NVDA estimates for the second half of 2025. The agency’s income, non-GAAP gross margins, and non-GAAP EPS forecasts for FY26 have been elevated to $176.78 billion, 73.8%, and $4.03, respectively, up from $166.9 billion, 73.7%, and $3.78.
This adjustment additionally led to a rise in Nvidia’s worth goal from $150 to $160, based mostly on a 42x a number of of the agency’s ahead earnings per share estimates for the calendar yr 2025.
Nvidia inventory stays Morgan Stanley’s high choose. The financial institution sees this as “one thing of a transitional quarter and thus not a serious catalysts for the inventory,” nevertheless it reiterates an Chubby score on the inventory amid expectations “that the Blackwell cycle will proceed to drive significant upside by way of 2h.”
