Morgan Stanley Says Buy the Dip in AI Stocks, Projects $3.4 Trillion in Hyperscaler Spending
Morgan Stanley is maintaining its positive outlook on artificial intelligence infrastructure spending, arguing that investors have overreacted to potential data center construction delays in Texas and Ohio. The bank expects hyperscalers to spend a combined $3.4 trillion in 2027 and 2028, reinforcing its view that recent concerns about project delays have not fundamentally changed the sector's construction outlook.
According to information shared by Coin Bureau, Morgan Stanley's latest report recommends that investors "buy the dip" in AI stocks. The bank believes concerns surrounding possible delays following the U.S. midterm elections have prompted an excessive market reaction, despite its construction forecasts remaining unchanged.
Morgan Stanley Maintains Its Data Center Construction Outlook
The bank expects the United States to add 27.6 gigawatts of data center capacity in 2029. That would represent a 38% rebound from the 19.9 gigawatts expected in 2028, indicating a significant increase in planned capacity additions after the projected slowdown.
However, Morgan Stanley also expects construction delays to affect a portion of the capacity originally planned for 2028. The report estimates that 20% of planned U.S. data center capacity for that year, equivalent to approximately 5 gigawatts, could be pushed into 2029.
These projected delays do not appear to have changed the bank's broader construction outlook. Instead, its estimates point to a shift in the timing of some projects, with part of the planned 2028 capacity expected to come online in the following year.
Powered Capacity Shortfall Adds Value to Grid-Connected Sites
Another key point in Morgan Stanley's assessment is the expected shortage of powered data center capacity. The bank sees a shortfall of more than 30% through 2028, suggesting that the availability of electricity could remain a significant constraint for the sector.
As a result, sites that are already connected to the power grid could become more valuable. This distinction is important because planned data center capacity does not necessarily translate into operational capacity when the required power infrastructure is unavailable.
The projected shortfall also provides context for the bank's continued focus on the scale of hyperscaler investment. Even as some construction projects face delays, Morgan Stanley expects major technology companies to maintain substantial spending commitments over the next two years.
Hyperscaler Spending Forecast Reaches $3.4 Trillion
Morgan Stanley expects hyperscalers to spend $1.6 trillion in 2027, followed by another $1.8 trillion in 2028. Together, those figures amount to $3.4 trillion over the two-year period.
The spending forecast is central to the bank's positive assessment of AI-related stocks. While concerns about data center delays in Texas and Ohio have contributed to investor caution, Morgan Stanley's unchanged construction outlook and spending projections indicate that it does not see those concerns as sufficient reason to abandon its broader expectations for AI infrastructure investment.
The bank's outlook combines a projected 19.9 gigawatts of U.S. capacity additions in 2028, a potential shift of approximately 5 gigawatts into 2029, and an expected 27.6 gigawatts of additions in 2029. It also highlights a powered-capacity shortfall of more than 30% through 2028, while forecasting $3.4 trillion in hyperscaler spending across 2027 and 2028.
Writer: Victoria HaleTechnology & Blockchain WriterVictoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.She prioritises clarity and accuracy when explaining technical developments to a general audience.
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