Morgan Stanley Tells Clients To Get Out Of Chip Stocks, Buy Hyperscalers: Here's Why

It's not just Bank of America that is urging clients to step away from the market's ultra-narrow semiconductor leadership, and allocate funds to the broader market away from momentum-driven chips and memory stocks. Morgan Stanley's Michael Wilson has also been vocally pushing a "broadening" trade, and as he writes in his latest Weekly Warm-up note (available to pro subscribers here), the bank's broadening thesis continues to gain momentum as Semis underperform. The steep fall in oil has helped to stabilize rates, which is another driver of the rotation to lagging areas of the market. We favor Consumer Discretionary Goods, Transports, and Biotech."

As Wilson explains, his call for a broadening in market performance is gaining momentum - no pun intended - thanks to several changing factors. As a reminder, the Morgan Stanley strategist first made the broadening call in November 2025 as part of his 2026 outlook. The thesis was based on a core view that the economy had entered a new expansion after completing the rolling recession in April 2025.