Nvidia(US:NVDA) Hua Er Jie Jian Wen·2025-08-21 13:48Core Viewpoint - Nvidia is expected to report strong Q2 earnings for FY2026, with revenue estimates raised to $46.6 billion, surpassing Wall Street consensus due to improved supply and demand dynamics [1][2]. Group 1: Revenue and Earnings Expectations - Morgan Stanley has increased Nvidia's Q2 revenue forecast from $45.2 billion to $46.6 billion, reflecting a 5.9% quarter-over-quarter growth [2]. - The expected earnings per share (EPS) for Q2 is $1.03, slightly above the consensus of $1.00 [2]. - For FY2026, Nvidia's total revenue is projected at $203.4 billion, exceeding the consensus of $201.4 billion [2]. Group 2: Demand Dynamics - Demand for Nvidia's products has shifted from "supply-constrained" to "sustained growth," with major clients like Amazon, Google, and Meta indicating a significant increase in demand for computing power [6]. - Secondary cloud providers and sovereign clients are emerging as important demand sources, diversifying Nvidia's customer base beyond just large tech firms [6]. Group 3: Supply Chain and Production Capacity - The ramp-up of Blackwell chip production is crucial for Nvidia's short-term performance, with ODM manufacturers expected to double their rack shipments within the year [7]. - Deutsche Bank reports that Blackwell chip revenue could reach $24 billion in Q1, nearly doubling from $11 billion in Q4 of the previous year [7]. - Improvements in testing bottlenecks and supply chain maturity are expected to support production capacity and revenue growth [7]. Group 4: Market Position and Competitive Advantage - Nvidia is projected to maintain an 85% market share in 2026, significantly ahead of competitors like AMD, due to its superior hardware performance and substantial annual R&D investment exceeding $5 billion [8]. - Companies like Google are expected to triple their spending on Nvidia products this year, highlighting Nvidia's irreplaceable role in mainstream AI workloads [8]. Group 5: Potential Growth from China Market - If Nvidia receives approval to resume shipments to China, Q3 revenue could increase by $50 billion, with a potential 10% EPS boost even after accounting for a 15% licensing fee [8]. - Recent reports indicate that the U.S. has expressed willingness to approve the sale of Nvidia's H20 chips to China, which could further enhance growth prospects [8].