Morgan Stanley pointed out that before the release of Nvidia's financial report, market expectations had risen, which was reasonable. The bank expects Nvidia's second-quarter results and guidance provided to be strong. However, Morgan Stanley added that its optimism about Nvidia is more focused on the future. The bank said that although demand continues to improve, supply remains a limiting factor, and Nvidia's revenue forecast depends on the speed of mass production of Blackwell chips. The bank expects Nvidia's third-quarter revenue to benefit from accelerated shipments of Blackwell chips.
Morgan Stanley raised its revenue forecast for Nvidia in the second quarter to $46.6 billion from the previous $45.2 billion, and its revenue forecast for the third quarter to $52.5 billion from the previous $51.3 billion; The full-year revenue forecast for fiscal year 2026 has been raised from the previous US $264.6 billion to US $273.2 billion, and the Non-GAAP earnings per share forecast has been raised from the previous US $6.28 to US $6.51.
Morgan Stanley pointed out that on the demand side, Nvidia's customers used "amazing", "unsatisfactory", "huge", etc. to describe demand in the earnings conference call. The tone of comments from hyperscale customers has changed: at the end of last year, it mainly emphasized supply constraints, but now it emphasizes more reasoning that demand has surged and capacity deployment is struggling to keep up. This is a positive signal for the sustainability of Nvidia's revenue growth, even as Blackwell chips begin to be shipped on a large scale.
The demand growth mainly comes from Nvidia's four major hyperscale customers. In addition, the needs of second-tier cloud service providers and sovereign customers are also forces that are easily underestimated. For example,CoreWeaveMost of the capital expenditures are concentrated in the second half of the year, and about 50% will occur in the fourth quarter. Nvidia's customer base is expanding, and strong demand is no longer limited to top customers.
On the supply side, a number of factors are improving. Rack assembly accelerates, and Hon Hai expects rack shipments to triple in the third quarter quarter. DharmaGreater ChinaThe hardware team predicts that the top four ODMs will double their rack shipments in the third quarter. It is estimated that 34,000 racks will be shipped throughout the year, corresponding to approximately 2.4 million GPUs, which means approximately US $90 billion in revenue for Nvidia. And this only includes the top four ODMs, excluding other partners.
The bottleneck in the testing process is also easing. Reduced lead times for Advantest testing machines helped to restore testing time normalization. Morgan Stanley analyst Charlie Chan predicts that the test volume of B200/B300 chips will increase from 1 million in the second quarter to 1.5 million in the third quarter. However, the forecast of the analyst who released this research report is relatively conservative, predicting that the test volume of B200/B300 chips will reach 1.2 million by the third quarter and 1.42 million by the fourth quarter.
Morgan Stanley added that in the second quarter, supply was not just about Blackwell chips. Currently, production of Hopper chips has stopped, and although demand for these GPUs remains strong, it is difficult to tell whether there will be new purchases in July. The bank predicts that Hopper chip revenue in the second quarter will drop 50% quarter-on-quarter to about $2.8 billion. In addition, the increase in B200 server shipments made up for some of the gap. Overall, the increase in the proportion of rack shipments and the introduction of B300 may bring slight benefits.
It is worth mentioning that in terms of the Chinese market, Morgan Stanley expects that Nvidia's third-quarter performance guidance will assume very little contribution from the Chinese market. If license approval is accelerated, there will be room for upside in revenue from the Chinese market, but there is still uncertainty about whether Chinese ultra-large-scale customers can finally purchase H20 chips.
Morgan Stanley said that three months ago, the bank was more optimistic than the market's expectations for improving Nvidia's demand and supply. Although market expectations have been raised, the bank is still optimistic that Nvidia will continue to increase its market share in 2025 and in 2026 Maintain a market share of about 85% in 2026, resisting risks from the ASIC field andAMD(AMD.US) competition.
Morgan Stanley said that Nvidia's share has increased significantly this year. Even for the largest users of ASICs (such as Google), spending on Nvidia is expected to more than triple, while spending on ASICs has only increased slightly. As Nvidia's R&D investment exceeds US $15 billion and expands into areas such as rack interconnection, software and services, it is increasingly difficult for competitors to develop ASICs that surpass Nvidia in mainstream tasks. Although AMD plans to launch a rack-level solution in 2026, its interconnection technology UALink will not be launched until later, when Nvidia has switched to the next generation of NVlink Rubin and provided it to customers with NVlink convergence technology. Therefore, although there is a window for low-cost alternatives, the performance gap is still the biggest obstacle to competition.
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