Morgan Stanley says Nvidia’s recent share lag is overdone, backing the stock to outperform as AI demand stays strong and the Vera Rubin platform reinforces its dominance.
Summary:
-
Morgan Stanley reiterated its Overweight rating and $250 price target on Nvidia, arguing recent share underperformance is overdone.
-
The bank says market checks across AI infrastructure remain “very strong and getting stronger,” with near-term upside likely.
-
Investor concerns around AI financing, competition and market share are seen as overstated.
-
Morgan Stanley expects Nvidia to maintain around 85% revenue share in 2026.
-
The upcoming Vera Rubin platform is highlighted as a key catalyst to reassert Nvidia’s leadership.
Morgan Stanley note earlier this week.
Morgan Stanley has reaffirmed its bullish stance on Nvidia, arguing that the stock’s recent underperformance does not reflect the underlying strength of demand across the artificial intelligence ecosystem.
The bank reiterated its Overweight rating and $250 price target, saying investor sentiment has become overly cautious despite what it describes as a “very robust AI environment.” Morgan Stanley said its latest market checks across the AI supply chain remain strong and are continuing to improve, reinforcing confidence in Nvidia’s growth outlook.
Nvidia shares have lagged the broader semiconductor sector so far this year, even as expectations for near-term earnings remain elevated. Morgan Stanley said this disconnect has puzzled investors, particularly given widespread bullish assumptions already embedded in forecasts. The firm noted it is increasingly hearing references to earnings power of more than $9 per share this year, compared with consensus expectations closer to $7.75, making further upside “highly likely.”
One factor weighing on sentiment has been concern around the financing of frontier AI model developers and Nvidia’s role within that ecosystem. Morgan Stanley acknowledged this requires some adjustment in how investors think about the company’s exposure, but argued fears of so-called circular financing are overstated. The bank said Nvidia operates across a broad customer base and would benefit even if AI spending becomes more diversified rather than concentrated.
Concerns around competitive pressure from custom silicon, including ASICs developed by rivals and alternative GPUs from AMD, have also resurfaced. Morgan Stanley dismissed these worries as “overblown,” noting that Nvidia gained market share in 2025 and is expected to retain roughly 85% of AI accelerator revenue in 2026. While customers are exploring supply diversification, the bank said Nvidia’s integrated approach remains a key advantage.
A central pillar of Morgan Stanley’s bullish thesis is the upcoming Vera Rubin platform, which it believes will provide a clear demonstration of Nvidia’s continued technological leadership. Unlike many competitors, Nvidia can offer rack-scale connectivity, software integration and system-level performance, reinforcing its dominance in large-scale AI deployments.
The bank also cautioned that Nvidia’s share lag partly reflects a broader rotation within semiconductors, as investors chase names with higher short-term leverage to AI buildouts. Even so, Morgan Stanley said Nvidia remains best positioned to outperform over time.
“The bottom line is that we see the stock outperforming from here,” the firm said, arguing Nvidia is well placed to climb the current “wall of worry” as execution and new platforms reassert its leadership.
This article was written by Eamonn Sheridan at investinglive.com.