Concerned about the future sales prospects of Nvidia Corp.? Joseph Moore, an analyst at Morgan Stanley, is not.
In a Friday note to clients, Moore dismissed the worry that some customers may have that they may have to reduce their expenditures for artificial intelligence technology as they try to analyze current inventories.
“The idea that we are in a digestion phase for AI is laughable given the obvious need for more inference chips which is driving a wave of very strong demand,” he stated.
Both training AI models and allowing those models to infer conclusions based on fresh data are accomplished by Nvidia’s (NVDA) graphics processing units. “Inference demand is explosive, which we believe should be durable,” Moore stated in his assessment.
Moore claims that while investors aren’t particularly against Nvidia’s stock right now, they do appear anxious about the possibility of a “inevitable” digesting.
“Those who want to see this as a bubble are manifesting that through the various conversations about longer term data-center leases, but it’s hard to have that view when you talk to actual customers about actual demand which remains strong,” he stated.
Moore says that clients may be shifting some of their expenditure around as they switch up which big language models they support, but he isn’t worried about possible slowdowns in data center leases.
Moore said the revised numbers were “likely very conservative.” He increased his calendar 2026 revenue forecast by 10.7% and his calendar 2026 profitability estimate by 11.9%.
“We are hearing about demand levels that are tens of billions above current run rates, limited by supply,” he stated. “Obviously that can change with a shifting economic backdrop, but the fact that the strength is coming from the revenue generating part of the AI business – inference – we don’t expect that.”
Friday afternoon trading has seen a 4% increase in Nvidia’s stock price. So far this year, it has dropped 22%.
