Morgan Stanley says AI stock sell-off is excessive, data center construction may only be delayed by one year

Morgan Stanley believes that the market's concerns that the outcome of the US election might slow down data center construction, leading to a sell-off of AI-related stocks, are likely overblown. The bank stated that AI spending may continue to expand and noted that the previously expected approximately 5 gigawatts of US data center planned capacity for 2028 could be postponed to 2029, rather than canceled. Morgan Stanley added that this would leave the spending plans of hyperscale cloud service providers largely unchanged. Analysts indicated that this delay could extend the AI investment cycle by easing supply constraints and supporting pricing. They remain optimistic about leading AI beneficiaries including Amazon, Microsoft, Meta, and Google, while also seeing opportunities among semiconductor, infrastructure, and software companies.