Chipmakers: AI Hype Boosts Prices, But For How Long?

Lisa Shalett, Morgan Stanley's chief investment officer, issued a clear warning to investors. She believes the frenzied enthusiasm for artificial intelligence has pushed chipmakers' stock valuations too high, and they might not sustain this pace.

Her argument is straightforward: chipmakers don't actually possess the pricing power the market attributes to them. Lisa Shalett of Morgan Stanley, on July 10, 2026, urged investors to be cautious about chipmakers. This limited "pricing power" means that, despite the AI race, they won't be able to endlessly hike their product costs.

A company's ability to set prices, or "pricing power," is vital because it dictates how much profit it can generate. If customers have many alternatives, or if the market becomes saturated, the company struggles to maintain high margins.

A company's "pricing power" indicates its ability to raise prices without losing sales volume. For chipmakers, AI optimism has created an illusion. Many believe the demand for AI chips is infinite, allowing companies to charge any price. However, Morgan Stanley suggests the reality is quite different, and evidence is mounting against this view.