Morgan Stanley's Chief Investment Officer Michael Wilson interprets the recent surge in AI chip stocks as a commodity-like boom fueled by Federal Reserve liquidity, rather than a direct reflection of underlying AI demand. He points to a rotation in the market, where previous liquidity-driven rallies in gold, silver, rare earths, and energy are now seen in semiconductors. Wilson believes this cycle is closer to its peak than its beginning, cautioning investors that a potential cooldown for chip stocks could occur this summer.
Wilson highlights a striking analogy: semiconductor stocks have been tracking silver's performance with a four-month lag. The iShares Silver Trust (SLV) has dropped 35.42% from March 2, 2026, to June 29, including a 22.9% decline in the last month. If this pattern holds, the recent dip in silver could foreshadow a challenging summer for chip stocks. Similarly, rare earth stocks, like the VanEck Rare Earth and Strategic Metals ETF (REMX), saw a 144% increase since May 30, 2025, comparable to the 170% rise in the VanEck Semiconductor ETF (SMH) over the same period, further supporting his commodity boom hypothesis.
Despite his short-term caution, Wilson remains structurally bullish on the long-term AI infrastructure buildout, expecting robust capital expenditure through the end of the decade. He notes that NVIDIA's first-quarter fiscal year 2027 revenue surged 85.23% year-over-year to $81.615 billion, with data center revenue reaching $75.25 billion. However, he observes a slowing rate of sequential guidance growth and compressing upside surprise in earnings per share, suggesting the rapid acceleration seen previously is moderating.
JPMorgan strategists, while also noting the divergence between chip stocks and hyperscalers, suggest two scenarios for the gap to narrow. The more bearish outlook involves hyperscalers pulling back on AI capital expenditure, which could negatively impact chip stocks. The more bullish scenario, which JPMorgan leans towards, anticipates improved AI monetization by hyperscalers, leading them to "catch up" with chip stocks.
