Morgan Stanley (NYSE: MS) has identified a select group of stocks it believes are best positioned heading into 2026, citing strong fundamentals, favorable industry trends, and multiple near-term catalysts.

The Wall Street bank’s top ideas span artificial intelligence, cybersecurity, data storage, and digital media.

Nvidia (NASDAQ: NVDA)

Nvidia (NASDAQ: NVDA) remains Morgan Stanley’s core play on the artificial intelligence theme. The bank views the stock as central to the AI trade, supported by accelerating revenue growth and sustained demand that continues to exceed supply. 

Notably, Nvidia has outperformed its own guidance, adding billions in sequential revenue, while the long runway for AI infrastructure spending keeps its outlook constructive as sentiment around the sector stabilizes.

Spotify (NYSE: SPOT)

Spotify (NYSE: SPOT) is highlighted for its combination of growth and improved profitability. Morgan Stanley sees the company’s use of AI as a competitive advantage rather than a threat, with concerns around music label disruption already reflected in valuations. 

The bank expects Spotify to offset higher content costs in 2026 through pricing power, rising average revenue per user, and operating leverage, supporting margin expansion. Spotify shares are up about 30% so far in 2025, reflecting growing confidence in its business model.

Palo Alto Networks (NASDAQ: PANW)

Palo Alto Networks (NASDAQ: PANW) is positioned as a leading beneficiary of platformization and AI adoption in cybersecurity. Morgan Stanley recently raised its price target on the stock, citing attractive valuation levels and solid growth prospects. 

Additionally, the bank is optimistic about Palo Alto’s pending acquisition of CyberArk, which it expects to strengthen the company’s product offering and long-term earnings power. Despite a modest 2025 gain of roughly 3.6%, Morgan Stanley sees meaningful upside as acquisitions are integrated and AI becomes a stronger demand driver through 2026.

Western Digital (NASDAQ: WDC) 

Western Digital (NASDAQ: WDC) rounds out the list as a top pick tied to cloud capital expenditure growth. The banking giant pointed to improving demand in the hard disk drive market, pricing power, and strong exposure to public cloud spending.

It also sees several upcoming catalysts, including investor events and earnings, that could further support the stock. Western Digital has been one of the standout performers in 2025, with shares up more than 300%, yet Morgan Stanley believes the fundamentals still justify a bullish outlook going into next year.

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