NVDA: Morgan Stanley Says 'Time to Power Up' Nvidia Ahead of Earnings

Morgan Stanley has raised its price target on Nvidia to $206, maintaining a "Buy" rating ahead of the chipmaker's Q2 FY26 report, citing robust customer demand and improved supply of Blackwell GPUs. The firm now projects higher 2026 revenue and EPS, anticipating faster rack assembly and increased shipments, while forecasting Nvidia to retain an approximate 85% market share in AI datacenter chips next year. This upgrade reflects durable demand from hyperscale and smaller cloud customers, bolstering Wall Street's bullish sentiment despite potential near-term influences from China licensing and supply variables.

Analysis

Morgan Stanley has upgraded its price target on Nvidia to $206, reinforcing its "Buy" rating ahead of the company's Q2 FY26 earnings report on August 27. The revision is predicated on several key factors: robust and sustained customer demand, an improving supply chain for the new Blackwell GPUs, and an acceleration in rack assembly which is expected to boost shipments in late 2025 and early 2026. Consequently, the firm has raised its revenue and earnings per share (EPS) estimates for fiscal 2026, anticipating revenue beats in the upcoming July and October quarters. The analysis projects Nvidia will maintain a dominant competitive position, capturing approximately 85% of the AI datacenter chip market next year. This market strength is supported by durable demand from hyperscale clients and increasing adoption among smaller cloud service providers. While the overall outlook is strongly positive, potential near-term volatility could arise from China licensing regulations and other supply chain variables.

Key Decisions for Investors

• Investors could consider the pre-earnings period as a window to build positions, given Morgan Stanley's upgraded forecasts for revenue and EPS driven by improving Blackwell supply and sustained demand.
• The upcoming August 27th earnings report is a critical catalyst; focus on whether management's guidance on shipments and demand from both hyperscale and smaller cloud customers validates the analyst's bullish thesis.
• Given the projection that Nvidia will maintain an 85% market share, investors may want to assess their exposure to rival AI chipmakers, whose path to capturing significant market share appears increasingly challenging.
• Despite the positive outlook, it is crucial to monitor for any disclosures regarding China licensing and supply chain variables, as these represent the primary near-term risks to the forecast.