Morgan Stanley is growing more bullish on Nvidia's long-term AI prospects. In a note released Thursday, the investment bank said Nvidia's fiscal second-quarter results beat expectations, but the real story was management's longer growth runway. As a result, Morgan Stanley lifted its fiscal 2028 revenue forecast and price target, signaling confidence that the AI boom has further to go.
What Morgan Stanley is saying
The bank now models about 70% revenue growth for Nvidia in fiscal 2028, a sharp jump from its previous estimate of 52%. That figure is also well above Wall Street's consensus of roughly 40%. Morgan Stanley also raised its fiscal 2028 and 2029 revenue estimates by about $100 billion and $200 billion, respectively.
Despite the upbeat outlook, the bank notes that demand for Nvidia's AI chips still exceeds supply. That supply constraint is a recurring theme across the industry, as Wedbush analysts have argued Nvidia can outrun these constraints. Near term, Morgan Stanley sees slightly softer gross margins, partly due to higher memory costs and the ramp of new products.
Why this matters for investors
Nvidia has become the bellwether for the AI trade. Its chips power the data centers that train and run large language models, and its earnings reports often move the entire tech sector. When a major bank like Morgan Stanley raises its long-term forecasts, it reinforces the narrative that AI spending is not a one-quarter phenomenon but a multi-year investment cycle.
For everyday investors, the key takeaway is that analysts see Nvidia's growth continuing well beyond the current fiscal year. The company's ability to sell every chip it can make—despite supply constraints—suggests pricing power and strong customer demand. However, the mention of softer gross margins is a reminder that even the hottest companies face cost pressures.
The broader AI landscape
Nvidia's influence extends far beyond its own stock. Its upbeat forecasts have helped lift chip stocks globally, from hardware makers in China to tech shares in Europe. The company's results have also been a factor in reviving the AI rally, though macro events like central bank meetings can still temper sentiment.
Nvidia's leadership is also engaging at the highest levels. The company's CEO is set to attend a G20 tech meeting alongside OpenAI's CEO, and there are reports of deal talks with SoftBank. These moves signal that Nvidia is not just a chipmaker but a central player in shaping the AI ecosystem.
What to watch next
Investors will be watching Nvidia's gross margin trajectory and whether supply can catch up with demand. The company's ability to maintain its growth rate will depend on ramping production of its next-generation chips and managing input costs. Morgan Stanley's raised estimates suggest the bank believes Nvidia can navigate these challenges.
For those holding Nvidia stock or funds that include it, the message is one of continued growth, but with a caveat: the stock's valuation already reflects high expectations. Any stumble in execution could lead to volatility. As always, diversification and a long-term perspective remain prudent.
