Morgan Stanley Sees AI Hyperscalers Overtake Chips in Market Rotation

Morgan Stanley's Michael Wilson says US stocks are rotating leadership from semiconductor names to AI hyperscalers (Microsoft, Amazon, Meta) as momentum fades in chips and hyperscalers’ capex outlook may ease. The Philadelphia Semiconductor Index has dropped about 14% from a peak, while a UBS hyperscalers basket is down modestly; the S&P 500 has been under pressure as investors await Nvidia for AI demand cues. Wilson favors hyperscalers in the near term, expects the rotation to continue in a choppy market, and sees consumer discretionary, transport, and biotech benefiting from broader leadership shifts. His year‑end S&P 500 target is around 8,000 (roughly 7% higher from current levels).