Woofun AI reports that Morgan Stanley’s strategy team, led by Mike Wilson, favors mega-cap cloud computing firms over semiconductor makers for the coming months. The bank cites stable core businesses, AI development potential, and improving profit capabilities as key strengths for large tech companies.

However, the team notes that cloud stocks have risen approximately 30% more than chip stocks in the past three weeks, reducing the current risk-reward ratio.

Morgan Stanley maintains its year-end target of 8000 points for the S&P 500 index. The institution warns that the index could fall to around 7000 points if momentum trading reverses its diffusion trend or if the Middle East conflict escalates further. Non-essential consumer goods and transportation sectors are also highlighted as potential beneficiaries due to unreflected profit improvement expectations.