Morgan Stanley Warns Semiconductor Stocks Are Overbought as AI Spending May Slow

According to Bloomberg, Morgan Stanley's Chief Investment Officer Lisa Shalett warned Friday that semiconductor stocks have become significantly overvalued amid signs that chipmakers' pricing power is weakening. She cited big tech companies including Meta, Google, and Amazon developing cheaper proprietary chips for AI data centers, which could reduce their reliance on external suppliers and pressure chipmakers' pricing ability.

Shalett noted the Philadelphia Semiconductor Index's price-to-earnings ratio has more than doubled since 2022. Her warning came as South Korean memory chipmaker SK Hynix officially listed on Nasdaq Friday, raising $26.5 billion in the largest foreign IPO in the U.S., though its shares on Seoul's exchange have fallen 26% from recent highs.