Nvidia stock: Morgan Stanley says Hopper/Blackwell demand is strong

NVIDIA (NVDA) is experiencing strong demand for its Hopper and Blackwell GPUs, according to Morgan Stanley analysts.

The investment bank said in a note Tuesday that Nvidia’s Blackwell chips are now entering volume production, with demand from major customers driving significant growth potential for the company.

Morgan Stanley reports that Oracle recently announced plans to build a Zettascale AI supercluster powered by 131,000 Nvidia (NASDAQ:NVDA ) Blackwell GPUs, delivering 2.4 ZettaFLOPS of AI performance.

Oracle’s request for more GPU supply has provided a boost to Nvidia’s outlook, as well as to its suppliers in the semiconductor industry.

"At a recent event, Oracle reportedly requested more GPU supply, which was upbeat news for the Asia AI semi/system supply chain," wrote the bank.

Morgan Stanley now expects TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) capacity to increase to 80,000-90,000 wafers per month by 2025, up from a previous estimate of 70,000.

In the near term, Nvidia’s Hopper GPU demand is said to remain strong, alleviating concerns about potential inventory risks.

According to Morgan Stanley, the Hopper H200 chips are seeing increased demand from smaller cloud service providers and sovereign AI projects.

Meanwhile, Blackwell chips are expected to see 450,000 units produced in the fourth quarter of 2024, translating into a potential revenue opportunity exceeding $10 billion for Nvidia.

Morgan Stanley also notes that while Nvidia is still resolving some technical challenges with its GB200 server racks, these issues are part of the normal debugging process for new product launches.

Hon Hai, Nvidia’s assembly partner, is reportedly on track to begin shipments of the GB200 server rack by late Q4 2024.

Morgan Stanley maintains a bullish outlook on Nvidia’s AI supply chain, favoring it over memory, PC, and cloud segments as Nvidia continues to capitalize on the growing demand for AI semiconductors.

Source: Investing.com