Nvidia’s upcoming earnings report is generating considerable buzz, and the AI powerhouse is widely expected to surpass lofty goals. Ahead of the results, Joseph Moore, an analyst at Morgan Stanley, expressed confidence in Nvidia’s prospects, maintaining an Overweight rating and a $144 price target for the company’s shares.
Moore acknowledged concerns surrounding potential delays in the shipment of Nvidia’s Blackwell chips. However, he believes these delays have minimal impact on the company’s overall performance. He noted that near-term business remains robust, and the ramp-up of Blackwell production is expected to occur within the year as initially projected. Moore anticipates some volume in October, followed by a more significant ramp-up in the January quarter. He expects Nvidia’s management to reiterate their commitment to achieving volume goals, possibly even downplaying any tactical setbacks.
Regarding the Blackwell delays, Moore emphasized that the shift in timing has little bearing on the broader picture. Supply and customer demand have swiftly shifted towards the H200 chip, indicating strong market preference. While customer enthusiasm for Blackwell remains high, Moore acknowledged that the impact of a small initial volume would be relatively limited. He believes Blackwell’s demand from cloud businesses will take time to materialize, and Hopper chips are currently witnessing exceptional demand from this sector. Moore suggested that some hyperscalers might prioritize acquiring more Hoppers, as they require high-volume clusters of Blackwell chips for optimal outcomes.
The H20 ramp-up, a China-specific AI accelerator developed to circumvent US export restrictions, is also expected to make a significant contribution to Nvidia’s revenue. Moore, citing checks in Asia, revealed that H20 production has increased to approximately 1.2 million units for the year, with an average selling price of $13-15k. This could generate over $10 billion in revenue for Nvidia over the next three quarters.
The analyst addressed concerns regarding potential margin compression due to the lower-cost H20 chip, dismissing them as overblown. He argued that even with a 20% lower cost for H20 compared to H200, the average selling price of $14k would still deliver a substantial gross margin of 74%, exceeding many bearish estimates.
Moore acknowledged that investor expectations represent the primary risk factor. He stated that for Nvidia’s stock to remain stable, the company needs to guide for revenue in the $33 billion to $34 billion range for the fiscal third quarter. Despite these high expectations, Moore expressed confidence in Nvidia’s future, anticipating improved visibility as new product ramps occur.
Morgan Stanley’s projections for Nvidia’s second and third quarters and fiscal year 2025 stand as follows:
*
Q2’25:
Revenue – $28.17B, Gross Margin – 75.6%, EPS – 63 cents*
Q3’25:
Revenue – $30.22B, Gross Margin – 75.7%, EPS – 68 cents*
FY25:
Revenue – $152.65B, Gross Margin – 75.1%, EPS – $3.53In premarket trading, Nvidia shares experienced a slight uptick of 0.54%, reaching $127.14, according to Benzinga Pro data.
