Nvidia’s AI Plan Could Boost Revenue and EPS

Morgan Stanley indicates that Nvidia’s plan to mobilize potential investments of up to $500 billion in AI infrastructure is a positive factor for the stock, as it could help alleviate concerns about circular funding, in addition to creating new recurring revenue streams.

The plan involves six institutional partners establishing independent funding platforms for AI centers and facilities, with Nvidia potentially contributing up to 25% of the investments. The bank believes that relying on third-party financing could boost demand for Nvidia chips and provide additional revenue-sharing opportunities.

Morgan Stanley estimates that if Nvidia achieves a revenue share of 35% above the breakeven point, it could increase EPS by more than 10% by fiscal year 2029, despite credit and leverage risks, and the fact that the $500 billion represents potential investments, not confirmed funding.

The bank affirmed its "Overweight" rating for the stock, with a target price of $288, considering Nvidia its preferred choice in the semiconductor sector.