Nvidia (NVDA) posted fiscal Q4 revenue $3 billion above its own guidance for a second straight quarter and forecast $5 billion above expectations amid continued strength in artificial intelligence-driven data center demand, Morgan Stanley said in a note Thursday.

The investment firm described the company's results as the "largest, cleanest beat and raise" in the sector's history, exceeding the second best three months ago which was also Nvidia, and raised revenue and earnings estimates for fiscal 2027 and 2028.

While investors remain focused on the durability of hyperscaler spending and pressure on free cash flow, Morgan Stanley said "underlying compute demand" remains strong, with no visible signs of a pause.

The firm acknowledged potential near-term margin pressure from product transitions and rising component prices, but said Nvidia's long-term outlook remains compelling, supported by sustained AI workload growth and improving "earnings quality" following the inclusion of stock compensation in non-GAAP results.

Morgan Stanley raised its price target to $260 from $250, and maintained an overweight rating on Nvidia.

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