Morgan Stanley names Nvidia its top semiconductor pick

Morgan Stanley reinstated Nvidia as its top pick in the semiconductor sector on October 6, 2026. The bank highlighted the company's valuation of 15 times fiscal year 2028 earnings following a road show with CEO Jensen Huang, CFO Colette Kress, and Head of Investor Relations Toshiya Hari.

The bank noted that half of Nvidia's business comes from outside hyperscalers and frontier labs, including neoclouds, enterprise clients, and sovereign entities. In addition, Nvidia has mobilized half a trillion dollars in non-Nvidia capital to fund artificial intelligence data centers, helping navigate land, power, and shell constraints.

Management outlined plans to raise revenue per gigawatt from $40 billion to well above $50 billion using the upcoming Feynman architecture, expected in 2028. The Vera Rubin platform is projected to deliver up to 25 times token improvement compared to Blackwell. The company also expects its CPU revenue to expand from $20 billion in 2026 to $40 billion in 2027.

Regarding agentic artificial intelligence, Nvidia projected that an agentic user could generate 10 times the daily tokens of a human user. While persistent agents will lift CPU demand, Nvidia management indicated that GPU spending will remain the largest share of customer outlays.