Morgan Stanley has drastically lowered its 2025 shipment estimates for NVIDIA's (NVDA, Financial) GB200 chips from 30,000-35,000 units to 20,000-25,000 units. In the worst-case scenario, shipments might fall below 20,000 units, impacting the GB200 supply chain market by $30-35 billion.
The report emphasizes that the growth cycle of the cloud computing market might extend until mid-2025, with a potential slowdown in growth to single digits by the fourth quarter. NVIDIA is currently experiencing a selling trend, with its stock closing 2.84% lower at $116.66, marking a 23.8% decline from its January peak, with its market cap dropping by $893.1 billion.
Goldman Sachs analysts suggest a cautious bearish stance on U.S. tech stocks until all major tech earnings are released, focusing specifically on AI-related capital expenditure. Morgan Stanley attributes this downgrade to reduced capital spending by one of GB200’s main clients, Microsoft (MSFT), negatively affecting the supply chain.
Additionally, the cloud computing and AI infrastructure ecosystems are not yet mature, with deficiencies in GB200-related network and power infrastructure limiting adoption. Disputes regarding the efficiency of large language models (LLM) will persist through 2025, complicating market value assessments.
Morgan Stanley notes the cyclical nature of capital expenditure in the cloud computing industry, which typically sees 2-3 years of growth followed by a 2-4 quarter downturn. Recent data shows capital spending in cloud computing is recovering, with a 62% year-over-year increase expected in Q3 2024, up from 59% in Q2. The growth cycle is anticipated to last until mid-2025, potentially slowing to single digits in Q4 2025 as the market nears its peak.
