Morgan Stanley warns AI chip rally may be running out of steam

Morgan Stanley warned that the AI chip rally may be losing momentum, calling semiconductor stocks meaningfully overbought with the Philadelphia Semiconductor Index P/E more than tripling since 2022. The firm highlighted that hyperscalers are re-engineering the AI data center tech stack with lower-cost proprietary chips, while Meta is reassessing its AI infrastructure spend and exploring renting capacity to third parties. SK Hynix began trading on Nasdaq after a 26.5 billion dollar IPO, the largest ever US listing by a foreign company, but its stock has fallen 26 percent from last month peak.