Wall St brokerages say AI selloff overdone, downplay Democratic regulation risks
NVDA•Morgan Stanley, UBS and other brokerages called last week’s AI stock selloff overdone, saying extreme regulation risks are unlikely to materialize. They pointed to Anthropic’s IPO and Nvidia’s November 17 earnings as nearer-term catalysts; Nvidia is expected to report quarterly data center revenue growth of more than 12%.
1. Brokerages see limited disruption
Morgan Stanley said the selloff looked overdone and that regulation would more likely push some data center projects from 2028 to 2029 than derail capital spending. It said a longer AI investment cycle could support smoother supply-demand rebalancing, an improved credit outlook and higher compute lease rates.
2. Earnings and IPO in focus
The brokerages identified 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 after markets close on November 17 and is expected to post a more than 12% quarterly rise in data center revenue.
3. Analysts remain positive
Morgan Stanley recommended “buying the drop” and remained positive on AI hyperscalers Amazon.com, Meta Platforms and Alphabet, as well as semiconductor, data storage and optical networking companies. HSBC said it was increasing equity exposure, leaning into US and Asian technology stocks, while Jefferies’ Jane Gibbons called the November 5 selloff “reactionary.” UBS analysts said markets had become too negative on AI political risk, credit risks and spending. Gibbons cited historical S&P 500 returns after daily declines exceeding 4%: 11.9% over six months and more than 20% over 12 months.
