Published: January 2, 2026 | Category: US Analyst Picks
Morgan Stanley analyst Joseph Moore remains firmly bullish on AI infrastructure heading into 2026. While everyone chases NVIDIA, Morgan Stanley has identified smaller AI plays with compelling risk/reward. ๐ค
“While we understand longer term skepticism on AI, we believe that 2026 will remain strong maintaining good visibility in 2027.”
โ Joseph Moore, Morgan Stanley
For investors seeking data-center exposure without incurring mega-cap tech prices, Morgan Stanley has identified four compelling opportunities across AI infrastructure, cloud computing, and enterprise software.
1๏ธโฃ Astera Labs (ALAB)
Data Center Connectivity
Hyperscale AI
Morgan Stanley analyst Joseph Moore highlights Astera Labs as offering “one of the best growth rates” in his coverage. The company provides critical connectivity solutions for hyperscale AI infrastructure.
“Astera offers one of the best growth rates in our coverage, with multiple product cycles and a very strong position in key AI technology. For investors seeking data-center exposure without incurring mega-cap tech prices, ALAB remains a relatively smaller name linked to connectivity within hyperscale AI buildouts.“
โ Joseph Moore, Morgan Stanley
- One of the best growth rates in coverage
- Multiple product cycles yet to ramp
- Strong position in key AI technology
- Hyperscale AI connectivity exposure
- Smaller alternative to mega-cap tech
2๏ธโฃ Western Digital (WDC) โญ TOP PICK
HDD Storage
Pricing Power
Morgan Stanley’s TOP PICK in tech hardware. Analyst Erik Woodring sees Western Digital as the most compelling combination of end-market strength, pricing power, and near-term catalysts.
“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 โ customer demand has gotten incrementally better.”
โ Erik Woodring, Morgan Stanley
- End-Market Strength: HDD one of healthiest markets
- Pricing Power: Strong pricing environment
- Near-Term Catalysts: Multiple upcoming drivers
- Demand Momentum: Customer demand incrementally better
- AI Data Storage: Beneficiary of data center buildout
3๏ธโฃ Appian Corporation (APPN)
SaaS
AI Capabilities
Morgan Stanley analyst Sanjit Singh expects sustained growth in SaaS for Appian. Channel checks suggest stable to improving growth, underpinned by solid public sector demand.
“Morgan Stanley expects sustained growth in SaaS for Appian. Their checks suggest stable to improving growth, underpinned by solid public sector demand. Product feedback indicates meaningful improvements in AI capabilities.“
โ Sanjit Singh, Morgan Stanley
- Sustained SaaS growth trajectory
- Solid public sector demand
- Meaningful AI capability improvements
- Low-code automation platform
- Stable to improving channel checks
4๏ธโฃ JFrog Ltd (FROG)
Security Software
Software Updates
JFrog is seeing sequential improvement in channel checks and building momentum. Morgan Stanley analyst Sanjit Singh highlights benefits from increasing software updates and greater traction of security products.
“Given sequential improvement in channel checks, building momentum, benefits from increasing software updates, and greater traction of security products, JFrog is positioned for sustained growth.”
โ Sanjit Singh, Morgan Stanley
- Sequential improvement in channel checks
- Building momentum in core business
- Benefits from increasing software updates
- Greater traction of security products
- DevOps platform leadership
๐ค Morgan Stanley’s AI Infrastructure Outlook
Morgan Stanley remains bullish on AI infrastructure despite broader market skepticism:
2026 Remains Strong
Continued AI buildout
2027 Visibility
Good forward outlook
Multiple Cycles
Product ramps ahead
“While we understand longer term skepticism on AI, we believe that 2026 will remain strong maintaining good visibility in 2027.“
โ Joseph Moore, Morgan Stanley
๐ Morgan Stanley’s AI Picks Summary
| Stock | Analyst | Sector | Key Theme |
|---|---|---|---|
| ALAB | Joseph Moore | AI Semis | Best growth rates |
| WDC โญ | Erik Woodring | HDD Storage | TOP PICK |
| APPN | Sanjit Singh | Low-Code SaaS | AI capabilities |
| FROG | Sanjit Singh | DevOps/Security | Building momentum |
โ ๏ธ Risk Disclaimer
- AI Skepticism: Longer-term AI doubts persist in market
- Valuation Risk: Growth stocks vulnerable to multiple compression
- Execution Risk: Product cycles must deliver as expected
- Competition: Tech markets highly competitive
This content is for informational purposes only and does not constitute investment advice. Always conduct your own research before making investment decisions. Tech stocks carry higher volatility and risk. Past performance does not guarantee future results.