[Yonhap]
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Morgan Stanley, the investment bank that rattled global semiconductor markets with its "Memory, Winter is Coming" report, is once again sounding the alarm — this time recommending that investors reduce their exposure to memory chip stocks including Samsung Electronics, SK hynix and Micron. The bank argues that the growth engine driving semiconductor shares has passed its peak and that the risk of further correction is relatively high.

In a report sent to clients Monday (local time), Morgan Stanley said it believes "the narrow semiconductor-led rally is drawing to a close and the market is entering a phase where leadership gradually broadens."

The report also said "semiconductors are ultimately an industry dependent on AI investment by hyperscalers — operators of massive data centers — so if hyperscalers begin to moderate the pace of their spending increases, earnings expectations for semiconductors could fall in tandem." It added that Meta's announcement that it would sell surplus AI computing capacity externally "is an example showing that this shift is beginning."

The bank argued that a slowdown in upward earnings revisions — the single most powerful driver of semiconductor share prices — is itself a signal that those shares have peaked.

Morgan Stanley also said the recent sharp selloff in semiconductor stocks "is likely an early signal that market leadership is rotating to other sectors."

The bank identified consumer goods, transportation, regional banks and biotech as sectors poised to benefit as investment flows out of AI-related stocks and into the broader market.

It added that hyperscalers running AI cloud businesses — including Alphabet (Google) and Amazon — would take over from semiconductor companies as the dominant market leaders going forward.

Accordingly, the bank said it "prefers hyperscalers over semiconductors in the near term" and recommends trimming semiconductor positions.

Morgan Stanley first shook the semiconductor industry in August 2021 with its "Memory, Winter is Coming" report, in which it forecast a slowdown in PC demand and a preemptive supply glut, and abruptly downgraded its investment ratings on both Samsung Electronics and SK hynix.

At the time, the semiconductor boom was at its height, buoyed by pandemic-era demand — but a chip downcycle followed, and the bank's prediction proved accurate.

Meanwhile, Samsung Electronics shares closed Tuesday down 6.92 percent from the previous session at 296,000 won ($193), while SK hynix fell 6.06 percent to close at 2.2 million won.


yeonjoo7@heraldcorp.com