Nvidia's Hopper and Blackwell Chips Drive Strong Demand, Morgan Stanley Predicts $10 Billion Revenue

Nvidia stock: Morgan Stanley says Hopper/Blackwell demand is strong By Investing.com

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.

Morgan Stanley: NVIDIA To Earn $10 Billion In Revenue From Blackwell Chips Alone In Q4 2024

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. Wall Street is rapidly pivoting away from gnashing its proverbial teeth over NVIDIA's peaking margins just a few weeks back to now rushing to incorporate the Blackwell production ramp-up in its collective bullish thesis, replete with expectations of a phenomenal surge in revenue from the GPU manufacturer's latest flagship product. For the benefit of those who might not be aware, the rumors of a Blackwell architecture design flaw had dominated the narrative around NVIDIA throughout the summer, with analysts contending that the flaw's rectification would relegate the Blackwell production ramp-up to a predominantly calendar year 2025 phenomenon. Then, while announcing its earnings for the June-ending quarter, NVIDIA confirmed the rumors of a minor design flaw but noted that the shortcomings were rectified by making a few minor changes to the photomask - a specific template that is used to create bespoke patterns on semiconductor wafers. Critically, the company announced at the time that it expected to start shipping Blackwell products in the December-ending quarter, with Hopper shipments also expected to increase. Now, Wall Street appears to be front-running NVIDIA's relatively cautious guidance by going a giant step forward. To wit, Morgan Stanley has now disclosed that it expects NVIDIA to ship 450,000 Blackwell chips in the December-ending quarter, earning ~$10 billion in revenue from this architecture alone: "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." While Morgan Stanley concedes that NVIDIA is still in the process of resolving a few "technical challenges" with its GB200 server racks, the Wall Street titan posits a qualifier that such issues are a part of a "normal debugging process for new product launches." What's more, Morgan Stanley still sees a very healthy demand profile for NVIDIA's H200 chips, courtesy of sovereign AI projects and smaller cloud service providers continuing to expand their capacity.