Morgan Stanley recently reaffirmed its confidence in Nvidia (NVDA), placing the semiconductor giant back at the forefront of their semiconductor recommendations. Analyst Joseph Moore reinstated Nvidia as the firm’s top pick on Monday, succeeding Micron Technology (MU). The shift comes in light of impressive stock performances across memory stocks, which have surged between 300% to 900% since Morgan Stanley’s previous endorsement.
Following the upgrade, Nvidia’s stock, which closed at $177.19 on Friday, experienced a 3% increase on Monday, reaching approximately $182.94. Despite this uptick, Nvidia’s stock has seen a decline of about 3% in the year 2026, contrasting with the robust growth of its business operations. Moore highlighted this disconnect between the company’s impressive performance and its stock price as an attractive investment opportunity.
Morgan Stanley maintained an Overweight rating on Nvidia with a bold price target of $260, suggesting a potential upside of around 47% from the recent closing price. Moore characterized the current valuation as “surprisingly good,” noting that Nvidia’s stock trades at roughly 18 times projected earnings for 2027, even as its fundamentals strengthen.
Moore’s rationale for the upgrade stems from Nvidia’s stagnant stock price over the past two quarters, despite continued growth in its business. He pointed to two primary concerns among investors: the possibility that Nvidia’s growth cycle may peak in 2026 and the threat of custom chips from competitors impacting its market standing. However, Moore countered these fears with compelling data. He observed that hyperscalers are committing to three-year supply contracts with upfront prepayments for GPUs, indicating sustained demand beyond 2026.
Other significant data supporting Moore’s call includes a remarkable increase in Nvidia’s earnings expectations for the current quarter, which have been raised by 38% in the last six months, juxtaposed against only modest movements in the stock price. As hyperscalers gear up for a projected $660 billion investment in AI infrastructure by 2026—nearly doubling the $443 billion spent in 2025—Nvidia is expected to retain a commanding 85% share of AI processor revenue, outpacing its competitors.
Nvidia delivered impressive quarterly results, with a record revenue of $68.1 billion, marking a 73% year-over-year increase, and bullish guidance of approximately $78 billion in revenue for the next quarter, which exceeds analysts’ projections.
Moore and the market are eagerly anticipating Nvidia’s upcoming GTC conference, set to take place from March 16 to 19 in San Jose, where CEO Jensen Huang is expected to unveil a multi-year product roadmap. This conference is seen as a pivotal moment that may alleviate market skepticism and solidify Nvidia’s position moving forward.
As competition evolves, with custom ASICs gaining traction, Moore acknowledges potential challenges for Nvidia. Yet, he asserts that the company remains the preferred choice in most deployments, driven by a robust ecosystem supported by its CUDA software platform and NVLink interconnects, which create significant switching costs for clients.
Overall, Morgan Stanley’s recent endorsement of Nvidia reflects an optimistic outlook, suggesting that the current market has underestimated the company’s durability at a crucial juncture. With significant investments in AI infrastructure and new product capabilities on the horizon, Nvidia looks poised for substantial growth in the coming years, reaffirming its status as a leader in the semiconductor industry.