Nvidia (NVDA) Blackwell demand uptrend will drive a fiscal Q2 beat and raise, but it is less likely to be a catalyst as the drivers of more significant multiple expansion are centered on longer-term issues, Morgan Stanley said in a Monday research report.

Longer-term issues include concerns around circular financing, gross margin trajectory beyond 2026, and the contribution of Rubin GPUs in H2, according to the note. The company will report fiscal Q2 results on Aug. 26.

Nvidia offers a highly attractive risk/reward, given multiple levers for upside as compute demand is likely to continue outpacing supply in 2027, according to Morgan Stanley.

Supply will be the limiting factor, particularly for Rubin, but Blackwell demand can sustain at a high level well into 2027, the analysts said.

Morgan Stanley reiterated its overweight rating on the stock with a price target of $288.

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