Morgan Stanley Boosts NVIDIA 2027 Revenue Forecast by 11% on AI Demand

Morgan Stanley has revised its 2026 earnings forecast for nvidia corporation (NVDA.US), dismissing the idea of an "AI digestion period." This adjustment reflects the firm's bullish outlook on NVIDIA's long-term growth prospects, particularly in the artificial intelligence sector. The move comes as the technology sector experiences rapid advancements in AI, with NVIDIA's graphics processing units (GPUs) at the forefront of this revolution.

Analyst Joseph Moore, in a report to clients, highlighted that despite macroeconomic and supply chain risks, the demand for GPUs has surged globally. This demand is driven by the shortage of reasoning chips related to most large language models. Moore noted that while Wall Street is anxious about various realistic concerns, Silicon Valley is focusing on a different challenge: the exponential growth in generated tokens since the beginning of the year, which has significantly strained the ecosystem and driven increased investment in processing these workloads.

Moore maintained his 2026 fiscal year earnings forecast but raised the revenue projection for the 2027 fiscal year (2026 calendar year) from $230.9 billion to $255.5 billion. He also adjusted the earnings per share forecast from $5.37 to $6.01, based on the continued growth of the data center business. This adjustment is supported by observations from API company Open Router and various proprietary channels, indicating a clear trend of increasing AI reasoning demand.

Moore further emphasized that despite emotional impacts from tariffs, trade wars, and other issues, these factors have not been reflected in hard data. Recent comments from industry leaders, including OpenAI CEO Sam Altman, Alphabet CEO Sundar Pichai, and Elon Musk, have highlighted the "rapid acceleration" of AI demand. Moore noted that the discussion about demand has intensified in recent days, with the supply of Blackwell remaining constrained while the demand for Hopper has improved. This further validates that models are being used to generate revenue, alleviating a major concern about NVIDIA's stock: that everything is driven by soon-to-be-depleted venture capital.

Ask Aime: How does Morgan Stanley's 2026 earnings forecast for NVIDIA reflect the rapid advancements in AI?

Moore explained that the strong performance highlighted is driven by actual usage and revenue generation within businesses, providing evidence that the scaling of reasoning is real as the industry shifts towards reasoning-oriented models. This trend is observed across different regions, suggesting that public concerns about China stockpiling H20 may not be accurate. The firm's confidence in NVIDIA's ability to capitalize on the AI market is underpinned by the company's strong product pipeline, strategic partnerships, and expanding market opportunities. NVIDIA's investments in research and development, along with its adaptability to evolving market trends, are expected to continue driving its growth trajectory. The increasing adoption of AI across various industries is likely to create sustained demand for NVIDIA's products, further bolstering its financial performance.