Morgan Stanley and UBS diverge on AI investment themes: the former is bullish on rotation among cloud service providers, while the latter bets on revaluation of AI infrastructure.

BlockBeats, July 6, as sector rotation within the U.S. stock AI sector intensifies, Morgan Stanley and UBS have offered different views on the next phase of AI investment themes. Morgan Stanley believes that funds are shifting from the previously surging semiconductor sector to hyperscale cloud service providers such as Microsoft, Amazon, and Meta, indicating that the AI rally is not over but is entering a phase of sector rotation.

UBS, on the other hand, is more optimistic about the long-term value creation potential of AI infrastructure. Its Holt team expects profitability for memory chip companies such as Samsung Electronics, SK Hynix, and Micron to continue improving, with the economic profit of the AI infrastructure sector potentially rising from approximately $200 billion in 2023 to $1.4 trillion by 2027, an increase of about 600%. Over the same period, the economic profit of major cloud service providers is expected to only grow to around $400 billion. UBS believes that the memory chip industry is transitioning from a traditional cyclical industry to one of the most important value creators in the AI supply chain.