Morgan Stanley, JP Morgan, and UBS recommended buying semiconductor stocks after recent declines, citing supply shortages expected until 2028. Joseph Moore, Morgan Stanley researcher, stated in an investor note on the 20th (local time) that AI datacenter investment will intensify memory shortages through 2028. Moore forecasts Q3-Q4 memory prices to rise at least 25% quarter-over-quarter, exceeding consensus estimates, due to AI demand outpacing supply. The banks view recent stock declines as temporary corrections in a long-term growth cycle driven by AI infrastructure expansion.
Morgan Stanley Forecasts Memory Shortage Through 2028
Joseph Moore, Morgan Stanley researcher, stated on the 20th (local time) that memory semiconductor supply shortages will intensify through 2028 due to AI datacenter investment expansion. Moore reported that interviews with datacenter purchasing managers showed no signs of memory shortage alleviation. He forecasts Q3-Q4 memory prices to rise at least 25% quarter-over-quarter on a same-condition basis, surpassing existing forecasts from Morgan Stanley and other major securities firms.
Moore stated, "Concerns that memory shortages will worsen next year and in 2028 are stronger than ever. Memory supply is insufficient to meet AI demand, and this situation does not appear likely to change." He added, "While mid-cycle corrections may occur due to concentrated investor buying and unusual cycle characteristics, the recent weakness presents a good entry opportunity for long-term investors."
JP Morgan and Laffertangle Investment Cite Supply Constraints
Mislav Matejka, JP Morgan researcher, stated that meaningful supply expansion is difficult to achieve before 2028, maintaining constructive semiconductor industry fundamentals. Matejka noted, "If hyperscalers' capital expenditure guidance remains strong, investors should consider buying semiconductor stocks again this summer."
Nancy Tengler, CEO of Laffertangle Investment, stated, "I do not view the decline in memory semiconductor stocks seriously." Tengler added, "If you believe in long-term growth potential, additional price declines should be used as aggressive buying opportunities."
UBS Reports Hedge Fund Reduction in Semiconductor Holdings
UBS identified three factors supporting markets despite semiconductor peak concerns and Middle East tensions: limited Middle East escalation risk, robust AI demand, and strong S&P 500 earnings. UBS analyzed that the process of reducing investment in AI and semiconductor stocks is nearing completion.
According to UBS Prime Brokerage data, global hedge funds recently reduced holdings in AI and semiconductor stocks by approximately 5% of related investment amounts — an unusually large selloff. Global hedge fund investment ratios in semiconductor and software stocks declined to April levels. The market views this reduction as profit-taking rather than industry deterioration, given ongoing AI investment expansion and high-bandwidth memory demand.
Michael Romano, UBS head of hedge fund equity derivatives sales, stated in a customer note, "Momentum stock risk reduction will bottom by end-July. Improving AI fundamentals provide a clear buy-the-dip signal, but a gradual approach to building positions is prudent rather than rushing in all at once."
DB Securities Analyst Compares Market Adjustment to Hydration Break
Korean securities firms interpret recent sharp declines in Samsung Electronics and SK Hynix as a consolidation phase rather than the end of a long-term uptrend. Kang Hyun-ki, DB Securities researcher, compared the current market to a "hydration break" in soccer when players briefly pause to drink water.
Kang stated, "As U.S. economic growth remains solid above the benchmark interest rate, the possibility of a market bubble bursting like in the past is low, and the uptrend will likely continue for the time being. The current correction is closer to overheated stock prices catching their breath."
FAQ
What did Morgan Stanley forecast about memory semiconductor supply on the 20th?
Joseph Moore, Morgan Stanley researcher, stated in an investor note on the 20th (local time) that memory semiconductor supply shortages will intensify through 2028 due to AI datacenter investment expansion. Moore forecasts Q3-Q4 memory prices to rise at least 25% quarter-over-quarter on a same-condition basis, exceeding consensus estimates from major securities firms.
Why do global investment banks view semiconductor stock declines as buying opportunities?
Global banks cite persistent supply constraints through 2028 driven by AI demand outpacing production capacity. Analysts from Morgan Stanley, JP Morgan, and UBS stated that meaningful supply expansion is difficult before 2028, while AI infrastructure investment and high-bandwidth memory demand remain robust. UBS data shows global hedge funds reduced semiconductor holdings by approximately 5%, which the market interprets as profit-taking rather than industry deterioration, supporting the view that recent declines present entry points for long-term investors.
