Investing.com -- Morgan Stanley reinstated Nvidia as its top semiconductor pick in a note Friday, telling investors the chipmaker is well positioned at an undemanding valuation.

"We certainly see NVIDIA as well positioned, with a very undemanding valuation," analyst Joseph Moore wrote, following investor meetings with CEO Jensen Huang, CFO Colette Kress and investor relations head Toshiya Hari in New York and Boston.

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

The bank said the bottleneck in AI is shifting from chip production to the speed at which new data center space can be built and financed, which plays to Nvidia's strengths. Nvidia lists 80 cloud partners, 55 of them outside the U.S., giving it flexibility to go where power is available.

Moore highlighted the breadth of Nvidia's customer base. “While 90% of investor conversations are around the biggest hyperscalers and frontier model companies, half of the business - probably the faster growing half - is a broader range of AI model companies, Neoclouds, sovereign entities, ODMs and OEMs, and enterprise customers,” wrote Moore.

He also noted Nvidia's strategy of driving up revenue per gigawatt, with its 2028 Feynman architecture expected to lift that figure from $40 billion to well above $50 billion.

On AI agents, Moore said they should boost CPU demand but drive far more spending on GPUs.

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