Morgan Stanley maintains an "Overweight" rating on NVIDIA (NVDA, Financial) with a target price of $160, indicating a potential 21% upside. Despite the short-term financial pressure from "H20 sales restrictions," which could result in a $5 billion revenue loss, the firm emphasizes the explosive growth in AI inference demand as a key driver for NVIDIA's future growth. Improvements in the Blackwell architecture supply chain further bolster this outlook.
The market is keenly awaiting NVIDIA's upcoming quarterly earnings report. Morgan Stanley projects NVIDIA's current quarter revenue at $42.2 billion, slightly below the official guidance of $43 billion. Revenue for the next quarter is estimated at $43.5 billion, accounting for a $4-5 billion reduction due to H20-related issues.
Changes in the U.S. H20 export policy significantly impact NVIDIA's income, with a potential 10% sequential revenue decline expected in the second quarter of 2025. This has led to a historic $5.5 billion inventory write-down. Despite ongoing lobbying efforts to ease restrictions, the outcome remains uncertain.
AI inference demand, driven by major cloud providers like Microsoft, Amazon, and Google, is seen as the true long-term value determinant for NVIDIA. Morgan Stanley believes that the market underestimates this demand surge, which is not venture-capital-driven but based on real business needs.
