Nvidia (NVDA) or Micron (MU)? Morgan Stanley Reinstates Its Top AI Chip Pick
Morgan Stanley has reinstated Nvidia (NVDA) as its top semiconductor pick, replacing Micron (MU). Analyst Joseph Moore noted that while Micron's stock has surged significantly, Nvidia's has remained flat despite strong business growth. Morgan Stanley maintains an Overweight rating and a $260 price target for Nvidia, suggesting a 42% upside. Investors are looking forward to Nvidia's upcoming GTC event, which may address AI spending concerns. Both Nvidia and Micron have a "Strong Buy" consensus, but Nvidia shows greater upside potential of 49% compared to Micron's 13%.
Nvidia (NVDA) stock received a vote of confidence from Morgan Stanley last week. Top Analyst Joseph Moore reinstated Nvidia as the firm's top semiconductor pick, replacing Micron Technology (MU), which had previously held that spot.
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Moore, a 5-star analyst, said memory stocks like Micron have already surged 300% to 900% since Morgan Stanley made that call months ago, making further gains harder from current levels. In contrast, Nvidia's stock has moved little recently even as its business continues to grow strongly.
As a result, Morgan Stanley kept its Overweight rating and $260 price target on Nvidia. The target suggests about 42% upside from recent levels. Moore said the stock still looks attractive because it trades at about 18 times expected 2027 earnings, even as demand for AI chips continues to rise.
Why Morgan Stanley Turned Bullish Again
Moore noted that Nvidia's shares have been flat for the past two quarters, while earnings estimates have continued to rise. He believes investor worries about AI spending slowing down or custom chips taking market share are overdone.
According to the analyst, hyperscale cloud companies are signing three-year supply deals, in some cases with large upfront payments. Moore said these contracts show that demand for Nvidia's GPUs is likely to remain strong for several years.
His analysis also showed Nvidia still dominates the AI processor market with about 85% share, while Advanced Micro Devices (AMD) holds less than 5% and custom chips account for just over 10%.
What Investors Are Watching Next
Investors are now looking ahead to the upcoming Nvidia GTC, where the company is expected to discuss its next-generation Vera Rubin AI platform. Moore believes the event could address concerns about the long-term outlook for AI spending and reinforce Nvidia's lead in AI chips.
Meanwhile, Micron is set to report its Q2 FY26 results on March 18. Wall Street analysts expect earnings of $8.54 per share, up 447% from the year-ago quarter. Also, revenue is projected at about $18.88 billion, representing a 135% year-over-year increase. The results could also give investors a clearer view of demand trends in the memory market.
Which Is the Better Chip Stock, According to Analysts?
According to TipRanks' Stock Comparison Tool, analysts have assigned a "Strong Buy" consensus rating to both Nvidia and Micron. However, Nvidia appears to offer greater upside potential of about 49% over the next twelve months, compared with roughly 13% for Micron. Nvidia also carries a higher Smart Score of 10, while Micron has a Smart Score of 7.
