Morgan Stanley: Nvidia’s Financial Strength Masks Growing Credit Risks

Morgan Stanley began its credit coverage of Nvidia stock with a neutral outlook, warning that the company’s expansion into AI ecosystem funding is creating credit risks not reflected in traditional leverage metrics.

The bank expects Nvidia’s total credit exposure to reach approximately $200 billion by 2028, of which $170 billion is tied to potential commitments and adjustments.

Despite this, Morgan Stanley believes the company’s financial position remains strong, with low leverage and supportive cash flows. However, it recommended a cautious approach, particularly given the more than $1 trillion in funding tied to GPUs and XPUs, which it considers a major risk that could weigh on the stock.

Morgan Stanley: Nvidia’s Financial Strength Masks Growing Credit Risks Morgan Stanley initiated coverage of Nvidia stock with a neutral rating, warning that the company’s expansion into AI infrastructure financing creates credit risks not reflected in traditional leverage metrics. The bank expects Nvidia’s total credit exposure to reach approximately $200 billion by 2028, of which $170 billion is tied to potential obligations and adjustments. Nevertheless, Morgan Stanley believes the company’s financial position remains strong, with low leverage and supportive cash flows. However, it recommended caution, particularly given that more than $1 trillion in financing is tied to the GPU and XPU units, which it considers one of the most significant risks that could weigh on the stock.