Morgan Stanley's US strategists highlighted a potential risk factor for chip stocks that have been riding high on the artificial intelligence wave. The strategist pointed out that these stocks might need to account for a risk premium due to the possibility of a Chinese invasion of Taiwan.
"We don’t think it’s a high risk, but it is a risk. There should be some risk premium built into that," the broker's strategists said during a Bloomberg TV interview. "Because there has been a dearth of opportunities," the strategist said, explaining why some stocks might be overpriced.The strategist also noted that for the past year and a half, investors have been eager to jump on any promising trend due to the overall lackluster growth in earnings. This eagerness is seen as a reason for the heightened interest in AI-related stocks.