According to Morgan Stanley, 91.7% of Nvidia’s 2027 revenue depends on AI infrastructure demand, the highest exposure on the bank’s list. An October 15 report estimates that hyperscalers and AI cloud providers will spend $1.58 trillion in 2027, up from about $980 billion this year, and $1.8 trillion in 2028, with nearly $700 billion going to Nvidia. The stock trades at 15 times fiscal 2028 earnings, and the bank expects a 25% to 50% return on invested capital. The report also details key risks: a cash-flow deficit driving more debt for hyperscalers, component inflation, a 32-gigawatt U.S. data-center power shortfall through 2028, and tax-break uncertainty around the midterms. In a spending plateau scenario, Morgan Stanley expects suppliers at the tail of the bullwhip, such as memory and optics makers, to suffer margin losses first, while Nvidia, positioned upstream, would be relatively spared.
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