Wall Street's fear of an AI slowdown is 'laughable,' Morgan Stanley says

1 month ago 23

Matthew Fox

Sat, Apr 26, 2025, 9:45 AM 2 min read

Nvidia CEO Jensen Huang talks to a robot astatine the company's AI league connected March 18, 2025.

The banal market's AI commercialized has waned this twelvemonth amid tariffs and fears of an AI slowdin.
But Morgan Stanley dismissed concerns of little AI spending, citing continued request for chips.
"We person been highlighting this beardown inference request precocious but it continues to get stronger," Morgan Stanley said.

One of Wall Street's apical banks isn't disquieted astir the artificial quality commercialized adjacent arsenic it struggles amid fears of little concern by companies successful 2025.

"The thought that we are successful a digestion signifier for AI is laughable fixed the evident request for much inference chips which is driving a question of precise beardown demand," Morgan Stanley expert Joseph Moore said successful a enactment connected Friday.

Moore pointed to caller comments from OpenAI's Sam Altman and Alphabet's Sundar Pichai arsenic grounds that AI companies inactive can't get capable GPU chips.

"While Wall Street wrings its hands implicit a laundry database of precise existent concerns, Silicon Valley absorption has shifted to a precise antithetic situation - maturation successful tokens generated of much than 5x since the opening of the twelvemonth is precise overmuch stressing the ecosystem, and is driving a surge successful concern to grip those workloads," Moore explained.

AI stocks person been peculiarly anemic this year, a inclination sparked by the late-January debut of DeepSeek's businesslike ample connection model. The exemplary sparked fears that unreality hyperscalers mightiness request less GPU chips from Nvidia to make their AI capabilities.

The AI bubble fears grew aft President Donald Trump unleashed a question of tariffs successful aboriginal April.

Shares of AI darling Nvidia person plunged 28% since precocious January, and mega-cap tech giants intimately tied to the AI commercialized are down astir 21% since their highest conscionable a fewer months ago.

Turning to Nvidia, Moore admitted that proviso constraints and export restrictions connected its H20 chips would apt bounds the company's gross upside implicit the adjacent fewer quarters. Still, erstwhile proviso constraints are worked out, they should spot a important limb of maturation successful 2026.

"NVIDIA had astir nary gross for Blackwell successful October, did $11 bn successful January, and apt good implicit $30 bn successful the existent quarter," Moore said, adding that helium doesn't expect the maturation to dilatory down. anytime soon.

"Per our checks, this request commentary has intensified successful the past fewer days," Moore said. "We person been highlighting this beardown inference request precocious but it continues to get stronger."

Moore accrued his calendar twelvemonth 2026 gross and net per stock estimates for Nvidia by 10.7% and 11.9%, respectively, adding that the spot elephantine remains a "top pick."