MW Nvidia's stock is Morgan Stanley's new top chip pick - replacing Micron

By Emily Bary and Britney Nguyen

An analyst sees a 'surprisingly good entry point' for Nvidia investors given the stock's recent sluggish performance

Nvidia's stock is down to start 2026 but rising on Monday.

Nvidia is once again Morgan Stanley's top stock pick in the chip sector, reclaiming that spot from Micron Technology.

Analyst Joseph Moore highlighted that the shift encapsulates an "interesting debate" over whether memory stocks or Nvidia's stock (NVDA) is the best way to play the artificial-intelligence boom. "There is a commonly voiced view that memory stocks are pricing in a much longer and more durable cycle than processor stocks; we actually somewhat disagree with that," he wrote.

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Moore acknowledged that Nvidia's stock has struggled to move higher recently despite signs of improved business performance. "Those concerns should turn to 2027 enthusiasm in the coming months," he noted.

"Sustainability is harder but across-the-board checks point to hyperscalermultiyear spending increases," Moore wrote in his note to clients, adding that "conviction should grow" in the company's story.

Nvidia's stock is rising about 1% in morning action on Monday.

Moore's prior top-pick calls have panned out recently. He gave the designation to Sandisk $(SNDK)$ in September before switching to Micron $(MU)$ in November.

See also: Memory-chip stocks are still quite cheap - especially if you look overseas

"The thesis was that the strength in AI would drive more earningsleverage in other names, and that, while strength at Nvidia is central to theshortages in memory, the earnings power was higher elsewhere," Moore noted.

That thesis turned out to be much more pronounced than Morgan Stanley had anticipated, he continued. "Memory stocks, which were already up sharply when we made that call, are up 300% [to] 900% since then, and Nvidia is literally at the exact same price where we made the switch on current-quarter earnings expectations that have grown 38% in six months."

That means that Nvidia investors are staring down a "surprisingly good entry point," Moore said, with shares trading at about 18 times estimated earnings for calendar 2027. Shares of Nvidia are down about 4% so far this year.

And the memory and Nvidia narratives are linked, he noted. "We are seeing hyperscalers place 3 year orders on memory suppliers, in some cases with full prepayment," Moore wrote. That suggests companies are gearing up for a broader multiyear boost in infrastructure spending.

Moore also acknowledged the competitive situation. Nvidia, of course, isn't the only chip company trying to cash in on major demand from large cloud providers. Advanced Micro Devices $(AMD)$ is stepping up its game in graphics processing units, while Alphabet $(GOOG)$ $(GOOGL)$ and other Broadcom $(AVGO)$ partners are making inroads with application-specific integrated circuits, a cheaper and rival type of processor.

But Moore thinks Nvidia can continue to command strong customer interest with its upcoming Vera Rubin AI platform, which is slated to start shipping in the second half of this year.

Customers that are also using custom chips and AMD's GPUs "can only get a fraction of what they want," Moore said, as demand for AI chips continues to outstrip supply. Therefore, he expects Nvidia's current Blackwell chips to remain the preferred choice of processor.

Although some "moats have eroded a little bit" among AI chip manufacturers, Moore thinks customers will still prefer Nvidia's chips - even if they're more expensive than rival offerings.

The Wall Street Journal reported that Nvidia isn't standing still when it comes to innovation, writing that the company plans a new inference-oriented chip system that leverages its new relationship with the startup Groq. Nvidia didn't respond to MarketWatch's request for comment on the potential new chip.

Read on: This could be Nvidia's next big move, with the stock in search of a positive catalyst

-Emily Bary -Britney Nguyen

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March 02, 2026 10:57 ET (15:57 GMT)

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