Morgan Stanley Joins NEXTPredict as Prediction Markets Bet on 'More Institutional' Play
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Morgan Stanley and UBS have diverged on their AI investment themes: the former favors a rotation among cloud service providers, while the latter is betting on a revaluation of AI infrastructure.
According to Mars Finance, on July 6th, as rotation within the US AI sector intensified, Morgan Stanley and UBS offered differing assessments of the next phase of AI investment. Morgan Stanley believes that funds are shifting from the previously surging semiconductor sector to hyperscale cloud service providers such as Microsoft, Amazon, and Meta. The AI rally is not over, but rather entering a sector rotation phase. UBS, on the other hand, is more optimistic about the long-term value creation capabilities of AI infrastructure. Their Holt team predicts that the profitability of memory chip companies such as Samsung Electronics, SK Hynix, and Micron will continue to improve, and the economic profit of the AI infrastructure sector is expected to increase from approximately $200 billion in 2023 to $1.4 trillion in 2027, an increase of approximately 600%, while the economic profit of large cloud service providers is expected to only increase to approximately $400 billion during the same period. UBS believes that the memory chip industry is transforming from a traditional cyclical industry into one of the most important value creators in the AI industry chain.
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Video | Morgan Stanley's Chief U.S. Equity Analyst: Chip Stocks May Correct by Over 30%, But S&P Still Targets 8000 Points by Year-End
On July 6th, Morgan Stanley's chief U.S. equity analyst, Mike Wilson, stated in an interview with Bloomberg that while chip stocks remain core assets in the AI wave, some are severely overbought, and a short-term correction of 30% to 40% is entirely possible. However, he believes this does not signify the end of the U.S. stock market bull run, and the S&P 500 is expected to continue rising as funds rotate into other sectors. He maintains his prediction that the S&P 500 will break through 8000 points by the end of the year, believing that the core logic supporting the market still comes from corporate earnings growth.
Morgan Stanley: AI chip fever is cooling down, cloud giants may see a rotation.
According to BlockBeats, on July 7th, Morgan Stanley strategist Mike Wilson's team stated that the cooling of semiconductor stocks over the past few weeks may not be over and could bring a more volatile trading environment to the broader US stock market. The bank believes that a rotation is underway within the AI sector. Previously, chip stocks significantly outperformed, while hyperscalers, including Microsoft, Amazon, Alphabet, and Meta, lagged behind. Wilson's team stated that this divergence may be unsustainable because the growth of semiconductor companies ultimately depends on the capital expenditures of cloud giants. Morgan Stanley stated that valuation and positioning pressures on cloud giants have already been priced in, and this sector could regain inflows if the market begins to reward more restrained AI spending. The bank is also optimistic about consumer discretionary and biotechnology, stating that falling oil prices and declining interest rate expectations could improve the risk-reward ratio of these sectors.
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