Morgan Stanley pours cold water: Chip manufacturers under pricing pressure, AI capital expenditures starting to slow down, US semiconductor stocks "clearly overbought"

Lisa Shalett, Chief Investment Officer of Morgan Stanley Wealth Management, stated that with increasing signs pointing to constraints on chip manufacturers' pricing power, investors should be cautious with chip stocks. She believes that the market's optimistic expectations for artificial intelligence spending may have already pushed related stocks to excessively high levels. In an interview on Friday, Shalett said: "We see that the AI data center technology stack is being redesigned, with more and more lower-cost homemade chips being incorporated, which are developed by many hyperscalers." Shalett issued the above warning at a time when SK Hynix officially listed on the Nasdaq on Friday, completing a $26.5 billion financing, setting a record for the fundraising scale of foreign companies going public in the US. However, SK Hynix has recently experienced sharp fluctuations in the domestic Korean market, with its stock price falling by 26% since the high in the previous month. Shalett said, "Overall, funds flowing into this trading theme are still abundant." But she pointed out that the industry's development is repeating a familiar pattern: "When the supply chain experiences bottlenecks, some companies - such as some storage chip manufacturers - take advantage of the opportunity to obtain excess profits, engineers will start looking for lower-cost alternatives." Earlier this week, Shalett pointed out in an investment report that the semiconductor sector has shown "clear overbought" signs. She further stated in the program that multiple indicators, from the semiconductor ETF to the Philadelphia Semiconductor Index, confirmed this view. Bloomberg compiled data shows that since 2022, the price-to-earnings ratio (PE) of the Philadelphia Semiconductor Index has more than tripled. Shalett also mentioned that Meta Platforms' recent adjustment to its AI strategy is a signal worth noting, indicating that some tech giants may begin to reassess capital spending plans that reach into the hundreds of billions of dollars. Meta CEO Mark Zuckerberg said in an interview this week that he is considering whether renting out parts of Meta's AI infrastructure to external customers can create more value. In response, Shalett said, "This to some extent indicates that companies have started discussing the pace, speed, and return on investment of these investments, as well as thinking about how to achieve commercial monetization ahead of time." She concluded, "I believe we are in the early stages of AI capital expenditure growth beginning to slow down." This article is taken from "Wall Street News" and authored by Yang Chen, edited by GMTEight: Li Cheng.