Catenaa, Friday, July 10, 2026- Morgan Stanley urged investors to be cautious on chipmakers as evidence mounts that their pricing power is limited.
“We are seeing the AI data center tech stack, if you will, being re-engineered to include lower-cost proprietary chips that many of the hyperscalers are now designing themselves,” Lisa Shalett, Chief Investment Officer at Morgan Stanley Wealth Management, said Friday to Bloomberg.
Shalett’s warning comes as South Korean chipmaker SK Hynix starts trading Friday on the Nasdaq after raising $26.5 billion in the biggest ever first-time share sale in the US by a foreign company.
The company has endured days of wild price swings in its home market, where the stock has tumbled 26% since peaking last month.
“There is ample capital still available broadly to this trade,” Shalett said. But what’s going on is an established phenomenon in the industry: “Where supply chains get bottlenecked, and folks are extracting excess rents as some of the memory chip guys are, the engineers get to work” to find cheaper alternatives.
Shalett called semis “meaningfully overbought” in an investor note this week. She said on Surveillance that there was evidence for this thesis in areas ranging from chip ETFs to the Philadelphia Semiconductor Index.
The price-earnings ratio for that index has more than tripled since 2022, according to data compiled by Bloomberg.
She pointed to Meta Platforms Inc.’s repositioning on AI as a signal that some Big Tech companies may be starting to question their hundreds of billions of dollars in capital expenditures.
Chief Executive Officer Mark Zuckerberg told Bloomberg this week that he’s considering whether some of Meta’s AI infrastructure could be more valuable if rented to outsiders.
“It kind of signals that there are conversations about the rate and speed and return on investment on some of this and how they can pull forward their monetization strategies,” Shalett said. “I think that we’re in the early innings of the beginning of that deceleration in the capex process now.”
