Wall St brokerages say AI selloff overdone, downplay Democratic regulation risks

Wall Street brokerages including Morgan Stanley and UBS said last week’s selloff in AI-related stocks was excessive, arguing that fears of strict regulation under a Democratic-controlled Congress are unlikely to derail investment. They expect company news, particularly Anthropic’s planned IPO and Nvidia’s earnings, to have a greater influence on the market in the coming weeks.

Morgan Stanley said regulation could delay some data centre projects from 2028 to 2029, potentially extending the AI investment cycle rather than ending it. Nvidia is due to report on 17 November, with data centre revenue expected to rise by more than 12 per cent quarter on quarter. HSBC said it was increasing its equity exposure after the correction, while Jefferies cited historical S&P 500 gains following daily falls of more than 4 per cent: 11.9 per cent over six months and more than 20 per cent over 12 months.