Core Viewpoint - The report from Morgan Stanley highlights a significant increase in the global production of GB200 NVL72 racks, driven by the surging demand for AI computing, particularly in cloud computing and data center sectors [1][2]. Group 1: Production Forecast - The global total production of GB200 NVL72 racks is estimated to reach 2,000 to 2,500 units by May 2025, a notable increase from the previous estimate of 1,000 to 1,500 units in April [1]. - The overall production for the second quarter is expected to reach 5,000 to 6,000 units, indicating a robust supply chain response to market demand [1]. Group 2: Company Performance - Quanta shipped approximately 400 GB200 racks in May, a slight increase from 300 to 400 units in April, with monthly revenue reaching about 160 billion New Taiwan Dollars, a year-on-year increase of 58% [2]. - Wistron demonstrated a strong growth trajectory, shipping around 900 to 1,000 GB200 computing trays in May, a nearly sixfold increase from 150 units in April, with revenue growth of 162%, reaching 208.406 billion New Taiwan Dollars [2]. - Hon Hai shipped nearly 1,000 GB200 racks in May, with a forecast of delivering 3,000 to 4,000 racks in the second quarter, despite some decline in its cloud and networking business due to traditional server shipment slowdowns [2]. Group 3: Market Dynamics - The actual delivery volume of GB200 racks may be lower than the reported shipment figures due to the need for further assembly of Wistron's L10 computing trays into complete L11 racks, which involves additional testing and integration time [3]. - Morgan Stanley ranks the preference for downstream AI server manufacturers as Giga-Byte, Hon Hai, Quanta, Wistron, and Wiwynn, with Giga-Byte being favored for its potential in GPU demand and the server market [3]. - A report from Tianfeng Securities indicates that major hyperscale cloud providers are deploying nearly 1,000 NVL72 cabinets weekly, with the shipment pace continuing to accelerate [3].

Investment Rating - The investment rating for NVIDIA is "Buy" with a maintained rating for the next six months [7] Core Insights - NVIDIA's overall performance exceeded expectations with total revenue of $44.1 billion for FY26Q1, representing a 69.0% year-over-year increase, surpassing market expectations of $43.3 billion [1] - The non-GAAP gross margin was reported at 61%, and if excluding a $4.5 billion impairment charge, it would have been 71.3%, slightly above Bloomberg's consensus of 70.96% [1] - Net profit for the quarter was $23.6 billion, exceeding Bloomberg's consensus of $23.1 billion [1] - The strong demand for AI continues to drive high revenue growth quarter-over-quarter [1] Business Segment Summary - Data center revenue reached $39.1 billion, slightly below consensus expectations of $39.2 billion; Compute business generated $34.155 billion, a 76.1% year-over-year increase, but below the expected $35.469 billion [2] - Networking revenue was $4.96 billion, a 56.3% year-over-year increase, significantly exceeding the expected $3.45 billion [2] - Gaming revenue was $3.763 billion, a 42.2% year-over-year increase, far surpassing the expected $2.845 billion [2] - Professional visualization revenue was $509 million, a 19.2% year-over-year increase, slightly above the expected $505 million [2] - Automotive revenue was $567 million, a 72.3% year-over-year increase, in line with expectations [2] - OEM & Other revenue was $111 million, below the expected $118 million [2] Guidance and Future Outlook - NVIDIA expects total revenue for Q2 to be around $45 billion (±2%), with moderate sequential growth across all business segments [3] - The company anticipates a recovery in gross margin to 75% by the end of the year [3] - The Blackwell architecture is expected to drive continued growth in the data center segment, although revenue from the Chinese market is projected to decline significantly due to export restrictions [5] - The company has accounted for an estimated $8 billion revenue loss from the Chinese market in its Q2 guidance [5] Investment Recommendation - The report indicates that NVIDIA's performance has exceeded expectations, with accelerating demand for AI data centers driven by the release of Blackwell products [6] - Adjustments have been made to the GAAP net profit forecasts for FY26-28, now projected at $99.4 billion, $140.3 billion, and $166.6 billion respectively [6]