Wall Street brokerages say AI selloff overdone, downplay Democrat regulation risks

Morgan Stanley, UBS, HSBC and Jefferies told clients last week's rout in AI stocks went too far, arguing sweeping federal limits on data centers under a Democrat-controlled Congress are unlikely, Reuters reports. Morgan Stanley expects the main effect to be some projects slipping from 2028 to 2029 rather than a derailed capex cycle, and recommends buying the drop in hyperscalers, Nvidia, Broadcom and storage and optical names. HSBC is adding equity exposure and sees Anthropic's IPO as the main near-term catalyst, while brokerages also point to Nvidia's Nov. 17 earnings.