Morgan Stanley: U.S. Stock Market Funds to Shift from Chip Stocks to Hyperscale Enterprise Stocks

Jin10 News, July 6 – Morgan Stanley strategists stated that as investors pull back from some of this year’s top-performing tech trades, the U.S. stock market will struggle to reach new highs. The team, led by Michael Wilson, pointed out that the rally in semiconductor stocks is losing momentum as investors pivot toward underperforming companies, including those involved in AI hyperscale data centers. This group includes Microsoft, Amazon, and Meta, which are highly attractive within the AI ecosystem due to their strong core businesses. However, the strategist noted that the major U.S. benchmark indices will remain under pressure in the short term, "given that the loss of momentum is occurring in some of the larger market-cap companies within the indices." Sector rotation continues in what he described as an "overall choppy and weaker stock market environment." Wilson expects that hyperscale enterprises, given their recent underperformance, may begin to temper expectations for their spending plans. The strategists set a year-end target of 8,000 points for the S&P 500 index, implying approximately 7% upside from current levels.