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Wall St brokerages say AI selloff overdone, downplay Democrat regulation risks

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Wall St brokerages say AI selloff overdone, downplay Democrat regulation risks

Business News Tech AI Wall St brokerages say AI selloff overdone, downplay Democrat regulation risks

Wall Street brokerages including Morgan Stanley and UBS called last week's rout in the AI trade overdone, arguing that the risks of extreme regulation of data center developments under a Democrat-controlled Congress are unlikely to play out.

Wall Street brokerages including Morgan Stanley and UBS called last week's rout in the AI trade overdone, arguing that the risks of extreme regulation of data center developments under a Democrat-controlled Congress are unlikely to play out. They instead pointed to Anthropic's IPO and Nvidia's upcoming quarterly earnings as events likely to have a bigger impact on the AI trade. Nvidia is set to report earnings after the markets close on November 17 and is expected to report a more than 12% rise in data center revenue on a quarterly basis.

Morgan Stanley said the selloff looked overdone and that the ultimate impact would be a push-out of some projects from 2028 to 2029, rather than a derailing of the capex story. "This has the potential to elongate the AI capex cycle, which has positives including: a smoother supply-demand rebalancing across the data center supply chain, improved credit outlook, and higher lease rates for compute," the analysts said in a note. com, Meta Platforms and Alphabet. It also said it saw opportunities in semiconductor firms Nvidia and Broadcom, data storage firms Seagate and Western Digital and optical networking firms Coherent and Lumentum. Brokerage HSBC said in a note that it is using last week's correction to increase its exposure to equities again, leaning into tech stocks in the US and Asia.


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