The Blues had been frontrunners to sign Lukaku from Everton before he signed for Man Utd last week.
The West London club are now expected to shift their focus towards Morata in the transfer market.
"Chelsea are actually going to end up coming out okay on this if they get Morata," Nicol said on ESPN FC.
"For me, there is a couple of things Lukaku has that Morata doesn't.
"That is just power and strength. I'll have a football player over that every day of the week.
"He (Lukaku) has got a proven goalscoring record in a team that's not under severe pressure week in, week out."