Morgan Stanley says these are top stock picks in 2026, including Nvidia – CNBC
Morgan Stanley named several stocks that are best positioned going in to 2026. The Wall Street investment bank said companies such as Nvidia are its top ideas for next year. Other overweight-rated names screened by CNBC Pro include: Western Digital, Spotify and Palo Alto Networks. Spotify Spotify is firing on all cylinders, Morgan Stanley said. Analyst Benjamin Swinburne said the audio streamer and podcast platform has a unique combination of AI usage and growth upside. “We see the AI risk to music labels already discounted and an opportunity to reposition AI as a tailwind,” he added. Swinburne believes Spotify has many tools available to drive margin expansion , including pricing power. “While we expect Spotify to absorb per-subscriber minimum content cost increases in ’26, likely starting in January with at least [Warner Music Group], we believe it can drive enough [average revenue per subscriber] growth and benefit from other factors to deliver on our and consensus gross margin expansion expectations,” he wrote. Shares of the company are higher by 30% in 2025. Palo Alto Networks Analyst Meta Marshall has the cyber security provider as a best idea for 2026. Morgan Stanley recently raised its per-share price target to $245 from $228 and said the stock is too attractive to ignore at current prices. Marshall likes Palo Alto’s growth prospects and is bullish on its acquisition of CyberArk, which has yet to close. “We initially made PANW our Top Pick in September as we saw the company best positioned to benefit from platformization and AI trends, particularly given valuation, all of which still remains true,” she wrote. Meanwhile, shares of the company are higher by 3.6% in 2025. “We continue to like the setup on the stock as we progress through CY26, believing there is still meaningful upside to results as the year becomes more back-end loaded, acquisitions close/integrate and AI becomes a stronger tailwind,” the analyst said. Western Digital The hard disk drive [HDD] data storage company is also firing on all cylinders, according to the bank. Analyst Erik Woodring said in a recent note that multiple catalysts lie ahead for Western Digital, including the company’s Innovation Bazaar, Investor Day and quarterly earnings early next year. “HDD continues to be one of the healthiest end markets that we cover in our tech hardware universe — customer demand has got incrementally better,” Woodring wrote. The investment bank also raised its price target on the stock to $228 per share from $188, citing the stock’s robust exposure to cloud capex spending. “WDC remains our Top Pick and the most compelling combination of end-market strength, pricing power and near-term catalysts,” Woodring said. The stock has quadrupled in 2025, soaring more than 302%. Nvidia “Still the nucleus for the AI trade, and at an undemanding multiple we thinks it’s hard to look elsewhere in AI. Nvidia continues to execute at a very high level, growing revenues sequentially by $10bn ($3bn above guidance) in October, and guiding for another $8bn in January. With hundreds of billions of demand (and climbing) still yet to be served, we expect the stock to go higher as AI sentiment stabilizes.” Spotify “We see AI risk to music labels already discounted and an opportunity to reposition AI as a tailwind. … .While we expect SPOT to absorb per-subscriber minimum content cost increases in ’26, likely starting in January with at least WMG, we believe it can drive enough ARPU growth and benefit from other factors to deliver on our and consensus gross margin expansion expectations.” Palo Alto Networks “We initially made PANW our Top Pick in September as we saw the company best positioned to benefit from platformization and AI trends, particularly given valuation, all of which still remains true. … .We continue to like setup on the stock as we progress through CY26, believing there is still meaningful upside to results as the year becomes more back-end loaded, acquisitions close/integrate, and AI becomes a stronger tailwind.” Western Digital “Entering next year, we have an OW-bias to (1) companies with exposure to the strength in Cloud Capex/Public Cloud spending – WDC/STX/ SNX. … .WDC remains our Top Pick and the most compelling combination of end-market strength, pricing power, and near-term catalysts. … .HDD continues to be one of the healthiest end markets that we cover in our tech hardware universe — customer demand has got incrementally better..”
