Morgan Stanley Bets Big on Nvidia Amid Shift in AI Bottleneck

Nvidia is once again Morgan Stanley's top semiconductor pick, according to a recent note from the bank. Analyst Joseph Moore believes the chipmaker is well-positioned at an undemanding valuation.

The stock trades at 15 times Morgan Stanley's fiscal 2028 earnings estimate, with scope for the multiple to expand if enthusiasm returns to AI. However, Moore notes that expansion is not required for the shares to work as estimates keep rising.

Nvidia's strengths lie in its ability to adapt to the shifting bottleneck in AI, which is now moving from chip production to the speed at which new data center space can be built and financed. The company lists 80 cloud partners, including 55 outside the U.S., giving it flexibility to operate where power is available.

Moore highlights the breadth of Nvidia's customer base, noting that while 90% of investor conversations focus on hyperscalers and frontier model companies, half of the business comes from a broader range of AI model companies, Neoclouds, sovereign entities, ODMs, OEMs, and enterprise customers.