November 9 (Reuters) – Wall Street brokerage firms, including Morgan Stanley and UBS, stated that the sell-off in AI-related trades last week was excessive. They also suggested that the risk of extreme regulatory measures targeting data center development—under a Congress controlled by the Democratic Party—is unlikely to materialize.
Instead, they pointed to events such as the upcoming IPO of Anthropic (ANT.O) and the imminent quarterly earnings report from Nvidia (NVDA.O) as factors likely to have a more significant impact on AI-related trading.
Nvidia is set to report its financial results after the market closes on November 17, with data center revenue projected to grow by more than 12% quarter-over-quarter.
Morgan Stanley stated that the recent sell-off appears excessive; the ultimate impact will likely be the deferral of certain projects—shifting them from 2028 to 2029—rather than an abandonment of capital expenditure plans.
In a report, analysts noted: “This could potentially extend the AI capital expenditure cycle, with positive implications including a smoother rebalancing of supply and demand within the data center supply chain, an improved credit outlook, and an increase in rental rates for computing resources.”
The brokerage firm recommends “buying the dip” and maintains a bullish outlook on AI-focused hyperscalers, including Amazon (AMZN.O), Meta Platforms (META.O), and Alphabet (GOOGL.O).
The company also indicated that it sees investment opportunities in semiconductor firms Nvidia (NVDA.O) and Broadcom (AVGO.O); data storage companies Seagate (STX.O) and Western Digital (WDC.O); and optical networking companies Coherent (COHR.N) and Lumentum (LITE.O).
In a report, HSBC stated that it is taking advantage of last week’s stock market pullback to increase its equity holdings, with a focus on technology stocks in the U.S. and Asia. HSBC believes that the upcoming IPO of AI lab Anthropic (ANT.O) will serve as a major catalyst in the coming weeks.
Jefferies equity analyst Jane Gibbons characterized the sell-off on November 5 as “reactive” rather than a fundamental correction, while analysts at UBS suggested that the market has become overly pessimistic regarding political risks, credit risks, and spending related to artificial intelligence.
In a report, Gibbons noted that, historically, the S&P 500 (.SPX) has often experienced a strong rebound following daily declines of more than 4%. The S&P 500 has risen 11.9% over the past six months and more than 20% over the past 12 months.