North American Semiconductor Weekly: Nvidia roadshow feedback, preferred target, new cloud business model becomes focus (Morgan Stanley)
Morgan Stanley released its weekly report on North American semiconductors, naming Nvidia (NVDA) as its key name discussed in the sector.
Morgan Stanley released its weekly report on North American semiconductors, naming Nvidia (NVDA) as its key name discussed in the sector. The core focus comes from investor feedback from recent roadshows, which discuss how Nvidia can expand its value investor base. An important point of controversy lies in its new cloud business model: Nvidia may shift from simply selling hardware to revenue sharing with cloud service providers. Morgan Stanley believes that although this involves credit support and risks, if successful, Nvidia will obtain a high-certainty, 100% gross profit recurring revenue stream. If this change comes true, it will fundamentally reshape Nvidia's profit model and valuation logic. At the same time, the report sorts out the schedule of important industry events from mid-July to the end of August (including TSMC, TXN, INTC, and NVDA financial reports). One-sentence conclusion: Nvidia's model shift from hardware sales to cloud revenue sharing is a potentially huge catalyst. Although there are risks, its successful implementation will mark a qualitative change in its business model and open up a new space for long-term valuation. Positive/negative: Positive for Nvidia (NVDA). The market is still focused on its hardware cycle and has yet to price in the potential benefits of new cloud business models. If the model is implemented, it will be a major benefit. Catalysts: 1) Nvidia's F2Q27 financial report in late August, pay attention to management's latest progress on the cloud business model and any revenue sharing cases; 2) Comments from CSPs such as Microsoft and Google on the return on investment in AI infrastructure; 3) Discussions about data center architecture and Nvidia network solutions at the OCP conference.