Morgan Stanley has stepped in to calm nerves after a sharp selloff in global memory chip stocks, describing the downturn as a 'healthy reset' rather than the beginning of a prolonged slump. The investment bank's analysts noted that valuations had become stretched following a blistering rally driven by artificial intelligence hype, and that the current correction was a necessary recalibration for the sector.
The selloff has hit major memory manufacturers hard. Samsung Electronics has fallen more than 12 per cent over the past month, while SK Hynix has dropped nearly 15 per cent, erasing billions in market value. The declines have been fuelled by growing fears that demand for AI chips may not sustain its breakneck pace, and that a glut of memory supply could depress prices in the second half of the year.
For UK investors, the turbulence in memory stocks matters because many pension funds and ISA portfolios hold exposure to global technology equities through tracker funds or actively managed strategies. The tech-heavy Nasdaq 100 has slipped 3.2 per cent this week alone, dragging down the value of many diversified portfolios. The FTSE 100 has been relatively insulated, but the FTSE 250's technology and semiconductor-linked names have felt the pressure.
AJ Bell investment analyst Dan Coatsworth commented: 'The memory chip sector is notoriously cyclical, and we are seeing a classic correction after an AI-fuelled surge. For long-term investors, this could be a buying opportunity, but timing the bottom is always tricky.' He added that UK investors should brace for continued volatility as earnings season unfolds.
Despite the gloom, Morgan Stanley remains bullish on the structural demand for memory chips driven by data centres and AI workloads. The bank reiterated its 'overweight' rating on the sector, arguing that the reset would ultimately create a healthier foundation for the next leg of growth. However, it warned that near-term headwinds from trade tensions and potential export controls could add further uncertainty.