NVIDIA (NVDA.US) is scheduled to release its first-quarter financial results after the U.S. market closes on Wednesday. Ahead of the report, Morgan Stanley analyst Joseph Moore reiterated his optimistic outlook on NVIDIA's prospects and outlined key focal points for investors this earnings season. Moore anticipates that NVIDIA will continue its consistent pattern of surpassing earnings expectations and raising guidance. He projects the company's revenue for the quarter to exceed market consensus by approximately $3 billion, with guidance potentially surpassing the consensus by $4 billion. In March of this year, Morgan Stanley designated NVIDIA as its "top pick" in the semiconductor sector, citing its position as a primary beneficiary of the generative AI wave. The firm has comprehensively raised its forecasts for NVIDIA's performance across multiple future quarters and the long term. Specifically, Morgan Stanley increased its revenue estimate for the April quarter from $78.25 billion to $79.26 billion and its earnings per share (EPS) estimate from $1.69 to $1.72. For the July quarter, the revenue forecast was raised from $84.84 billion to $87.88 billion, with EPS estimates increasing from $1.93 to $2.01. Regarding long-term projections, Morgan Stanley significantly raised its revenue forecast for NVIDIA's fiscal year 2027 from $353.8 billion to $380.59 billion and its EPS forecast from $7.93 to $8.61. The upward revision for fiscal year 2028 was even more substantial: the revenue forecast jumped from $452.4 billion to $587.45 billion, and the EPS estimate was sharply increased from $10.14 to $13.11. Moore particularly emphasized the importance of the Blackwell and Rubin AI platforms. He estimates that the cumulative revenue from the Blackwell and Rubin product lines could reach $1 trillion between 2025 and 2027. After deducting approximately $30 billion in Hopper-related product revenue for 2025, Morgan Stanley projects NVIDIA's data center business revenue for 2026 to 2027 to reach $845 billion, with the overall figure potentially higher when including other products. In contrast, the current market consensus for data center revenue during the same period is about $785 billion, while Morgan Stanley's latest projection stands at $884 billion. Based on a more optimistic long-term earnings outlook, Morgan Stanley raised its price target for NVIDIA from $260 to $285. This target price is based on a 22x price-to-earnings multiple applied to projected earnings for 2027. As of early trading on Monday, NVIDIA's stock price hovered around $220. However, Moore also noted that as the Rubin architecture enters mass production and supply chain costs rise, NVIDIA's gross margin may face some pressure in the future. He estimates the company's gross margin for fiscal year 2028 to be approximately 72.7%, lower than current levels. Meanwhile, Moore believes NVIDIA's current supply chain reserves remain quite robust. To date, the company has secured $95 billion in purchase commitments and holds about $21 billion in inventory, which is largely sufficient to cover most supply needs for the next 18 months. Additionally, investors will focus on NVIDIA's recently launched Groq product, its independent CPU business, and the latest developments in the Vera Rubin product cycle during the upcoming earnings call. Moore expects the Vera Rubin platform to remain on track for a significant ramp-up in the second half of this year.
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