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Morgan Stanley Gets Cautious on Chip Stocks

Rebecca McClay

Morgan Stanley has downgraded high-flying chipmakers on concerns that the sector is overheated. Semiconductor stocks like Advanced Micro Devices Inc. ( AMD) and NVIDIA Corp. ( NVDA) have been significantly outperforming the market for years. In response to these soaring valuations and with chip inventories rising to near 10-year highs, Morgan Stanley reduced its rating on the chip sector to "Cautious" from "In-Line." Essentially, the firm believes this industry will now underperform in the next year.