Next week the focus will be on the "NVIDIA Corporation (NVDA.US) financial report", Morgan Stanley believes it will be the strongest in the past few quarters, breaking the perception of "peak growth".

Morgan Stanley raised its target price for NVIDIA Corporation (NVDA.US) to $220. Analysts are expecting NVIDIA Corporation's upcoming third-quarter financial report to be a breakthrough quarter, potentially breaking the market's perception that its growth has peaked. According to Wind Trading Desk news, Morgan Stanley analyst Joseph Moore stated in a report on November 14th that industry research shows a substantial acceleration in demand, with NVIDIA Corporation having fully resolved early rack-related issues and demand continuing to surge. Currently, the growth bottleneck is more on the supply side of NVIDIA Corporation and in related hardware (storage, servers) and space/power, but these factors should not slow down the visible trend of accelerated demand. The ramp-up phase of Blackwell chips entering full-scale production will be a key driver. NVIDIA Corporation's positive statements at the GTC conference further reinforce this trend. Morgan Stanley believes that next week's performance will be NVIDIA Corporation's strongest financial report in the past few quarters. Although NVIDIA Corporation's stock price has been performing well, it has lagged behind AI peers. Morgan Stanley expects this situation to reverse. Supply and demand data show that demand is accelerating beyond expectations. Morgan Stanley industry research shows that both NVIDIA Corporation's customers and suppliers are signaling accelerated growth in the third quarter, contrasting sharply with the market's general expectation that NVIDIA Corporation's growth indicators have peaked. At the customer level, capital spending by cloud service providers in the third quarter is expected to increase by $142 billion, with each of the four major hyperscale cloud providers adding over $200 billion. Compared to the $1.15 trillion growth expected by 2025, the current dollar increase has reached $1.15 billion, up 60% from a quarter ago. From the supplier's perspective, ODM manufacturer Quanta expects its AI server revenue to accelerate in the first quarter of 2026, with a year-on-year growth of over 100% in 2026. To support this demand, Quanta plans to double its AI server capacity next year, as order visibility extends to 2027. Blackwell chips as the core growth engine Morgan Stanley raised NVIDIA Corporation's revenue expectations for October from $54 billion to $55 billion, and for January from $61.2 billion to $63.1 billion. The analysts point out that achieving quarterly growth of $8 billion in October and $8 billion in January will set a record high for industry historical growth. Blackwell chips are still the preferred AI chips, with very strong demand signals for Vera Rubin. While competitors are showing enthusiasm, this reflects progress and the strength of market demand. NVIDIA Corporation CEO Jensen Huang previously stated that revenue for the next five quarters needs to increase to $70-80 billion, with the stock price currently down 10% from the high point after Huang's statement. Morgan Stanley raised its expectations for NVIDIA Corporation's fiscal year 2027 revenue from $278 billion/$6.59 non-GAAP earnings per share to $298.5 billion/$7.11. Analysts believe that considering the strong backlog of orders, the company may provide higher guidance, depending on how conservatively they can maintain in a strong demand environment. The new target price of $220 is based on a 26 times price-to-earnings ratio of $8.43 per share for fiscal year 2027 ModelWare earnings, equivalent to a 25 times non-GAAP price-to-earnings ratio. This valuation represents a discount compared to the average forward price-to-earnings ratio (32 times) and two-year price-to-earnings ratio (28 times) over the past two years, reflecting expectations of slowing growth, while also providing a discount compared to the valuation of large AI semiconductor peer Broadcom Inc. This article is reprinted from "Wall Street News", author: Xu Chao; edited by GMTEight: Yan Wencai.