Morgan Stanley: NVIDIA (NVDA.O) - $500 Billion Third-Party Investment to Unlock AI Factories; Revenue-Share Model Opens Long-Term Growth
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Morgan Stanley reiterates an Overweight rating on NVIDIA (NVDA.O) with a $288 price target and names it top pick in semiconductors. NVIDIA has announced plans to mobilize $500 billion of potential investment from six institutional partners to form an independent compute financing platform that will invest in AI factories, with each opportunity assessed independently by the partners. In certain circumstances NVIDIA may provide a residual support mechanism capped at 25%, limited and residual-value based, designed to complement rather than replace independent underwriting. Third-party decision-making and capital meaningfully ease market concerns about circular financing while continuing to fuel investment by sovereign funds and emerging cloud providers. Direct credit exposure has been limited so far; the latest 10-Q shows $3.5 billion of exposure to partner lease guarantees.
The revenue-share economics are substantial: Morgan Stanley estimates a 35% revenue share could deliver more than $10 billion per gigawatt per year of incremental revenue at a 100% gross margin. Some credit risk and greater ecosystem leverage remain, but positives clearly outweigh the negatives. GAAP revenue is forecast at $393.0 billion for the fiscal year ending December 2027 and $598.8 billion for December 2028. With token growth of roughly 10x likely to keep compute constrained, the bank sees this passive investment structure as strongly favorable for NVIDIA.