Morgan Stanley: Ditch Chip Stocks for Hyperscalers

US stocks may struggle to reach new highs, according to Morgan Stanley strategists. The bank’s chief investment officer, Mike Wilson, warns that investors are shifting money out of some of this year’s biggest winning technology trades. Specifically, Wilson sees a rotation away from semiconductor stocks, known as “chips,” and into “hyperscalers.” Hyperscalers are large cloud computing companies that operate massive data centers, such as Amazon Web Services, Microsoft Azure, and Google Cloud. The strategists believe this move will limit overall market gains. While chip stocks have soared in 2024, Wilson argues that the next phase of growth will favor the infrastructure providers that power artificial intelligence, rather than the hardware makers.