‘Buy Nvidia Stock,’ Recommends Morgan Stanley Ahead of Q2 Earnings

Morgan Stanley analyst Joseph Moore reaffirmed his Buy rating on Nvidia, raising the price target to $206, citing a "very strong" 2026 outlook fueled by "insatiable" customer demand, particularly from hyperscale cloud customers, and improving Blackwell GPU supply. Moore significantly increased his 2026 revenue and EPS estimates to $273.2 billion and $6.51 respectively, anticipating Nvidia will maintain its dominant 85% market share despite limited near-term China revenue. This bullish assessment precedes Nvidia's Q2 FY26 earnings on August 27, for which Wall Street expects $1 EPS on $45.81 billion revenue.

Analysis

Ahead of its Q2 FY26 earnings on August 27, Nvidia (NVDA) received a significantly bullish update from Morgan Stanley, which reaffirmed a Buy rating and increased its price target to $206, implying a 33% upside. The core of this thesis rests on projections of a "very strong" 2026, underpinned by what analyst Joseph Moore terms "insatiable" customer demand, primarily from hyperscale cloud providers. This demand outlook has prompted Moore to lift his revenue estimates for the July quarter to $46.6 billion and the October quarter to $52.5 billion. Operationally, the supply of new Blackwell GPUs is reportedly improving, with accelerated rack assembly and testing expected to support shipments of 1.2 million units in October and 1.42 million in January. This robust fundamental picture supports the projection that Nvidia will maintain its dominant market position, capturing approximately 85% of the market in 2026 and outpacing competitors like AMD due to its entrenched software and services ecosystem. Consequently, Morgan Stanley raised its 2026 revenue and EPS estimates to $273.2 billion and $6.51, respectively. While near-term China revenue from H20 chips is expected to be limited, faster regulatory approvals are noted as a potential source of upside. It is important to contextualize this highly optimistic view against the broader consensus price target of $192.62, which implies a more moderate 5.83% upside.

Key Decisions for Investors

• Investors should focus on management's guidance in the upcoming earnings call, particularly for the October quarter and full-year 2026, to see if it validates the exceptionally strong growth trajectory outlined by the analyst.
• The sustainability of Nvidia's projected 85% market share is a critical pillar of the bull case; therefore, any commentary on the competitive landscape with rivals like AMD should be closely scrutinized.
• Monitor developments regarding U.S. export license approvals for H20 chips to China, as any acceleration could provide a material upside catalyst to current revenue forecasts.
• Given the significant divergence between Morgan Stanley's $206 target and the $192.62 consensus target, it may be prudent to weigh this high-conviction analyst view against the market's more tempered, though still positive, expectations.