Morgan Stanley tells investors to buy the AI dip, keeping $1.6tn and $1.8tn hyperscaler capex forecasts for 2027–28
The note says the market overreacted to the US midterms, though it expects 20% of US data centre projects planned for 2028, about 5 gigawatts, to slip into 2029.
Why it matters
After a week in which AI stocks sold off and Citi downgraded US tech, Morgan Stanley's 'Buy the Drop' report argues the AI investment cycle is intact even if political opposition to data centres delays some construction. It sees US data centre capacity additions falling 4% in 2028 before jumping 38% in 2029, and global additions growing 9% and 20% in those years, while flagging some downside risk to its 2028 capex figure. Watch whether hyperscaler guidance and permitting fights bear out the delay estimate.
Key facts
- Report titled 'Buy the Drop: AI Investment Opportunities Post the US Midterms'
- Hyperscaler capex: $1.6 trillion in 2027, $1.8 trillion in 2028
- 20% of US data centre projects planned for 2028 (5 GW) delayed to 2029
- US capacity additions -4% in 2028, +38% in 2029