Morgan Stanley has stated that the recent sell-off in artificial intelligence (AI) infrastructure stocks has created an attractive buying opportunity for investors, as long-term computing demand is expected to outstrip supply capacity.

The bank noted that the recent market weakness is more driven by technical factors rather than a deterioration in corporate fundamentals. It reaffirmed its bullish view on the AI infrastructure sector, arguing that improvements in AI capabilities, rising corporate adoption rates, and increasing capital expenditure will continue to drive demand for computing resources.

Morgan Stanley dismissed market concerns that companies might cut AI spending by limiting employee usage of AI tokens. The bank said that corporate AI costs currently represent only a small fraction of the productivity gains achieved.

The bank also indicated that the development of large language models in China will increase, rather than decrease, the demand for computing power, as more efficient AI models will drive broader AI adoption and higher overall usage rates.

At the same time, Morgan Stanley acknowledged that labor shortages, insufficient power supply, and political opposition to new data center construction do pose challenges. However, the bank views these issues as "speed bumps" rather than structural obstacles. It forecasts that the U.S. data center industry could face a power supply gap of 38 gigawatts by 2028 before new power solutions are deployed.

Morgan Stanley recommends that investors hold companies benefiting from AI infrastructure bottlenecks, semiconductor manufacturing, Chinese AI solution providers, energy security assets, and large cloud computing enterprises (Hyperscalers). The bank's top picks among U.S. large cloud companies currently remain Meta (NASDAQ: META), Google (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN).

Additionally, Morgan Stanley pointed out that its preferred AI infrastructure stocks have underperformed global equity indices by about 7 percentage points over the past month, despite these companies having strong long-term structural growth fundamentals. This further reinforces the bank's "buy on the dip" investment thesis.