Morgan Stanley: SPE sector declines to fund incremental WFE; market awaits AI capital return certainty

According to Chaoshang Research, Morgan Stanley released a Semiconductor Capital Equipment (SPE) industry report on September 7, highlighting seven core debates. Morgan Stanley noted that WFE (wafer fabrication equipment) forecasts continue to be revised upward, but the market is no longer satisfied with the narrative of further capacity expansion. Investors require clearer evidence of AI-related capital returns before they are willing to pay for incremental upside. Morgan Stanley recommends AEIS, MKS, and ONTO, which the market currently prices as peaking in 2027, and maintains a Market Perform rating on the SPE sector.