Morgan Stanley: AI semiconductor growth may continue to outperform cloud spending through 2028

Morgan Stanley stated that although the market expects data center investment to slow down, the growth of AI semiconductor suppliers may continue to outpace broader cloud spending growth through 2028, due to strong demand for advanced chip packaging. The firm expects total advanced packaging capacity to grow by about 50% by 2028, while capital expenditure by cloud service providers will increase more modestly, at 12%. The demand is expected to be supported by larger AI chip designs and the increasing use of advanced packaging for CPUs and network processors, while supply chain research indicates that TSMC and its partners will continue to expand. The report also believes that AI custom chip activity will remain robust, driven by new industry partnerships and inference-related deployments.