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AI Capex Fueling Strongest EM Earnings in Two Decades, MS Says

Abhishek Vishnoi
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⚡ Quantum Brief
Emerging-market stocks are poised for their strongest earnings growth since the 2002-04 super-cycle, driven by a surge in AI capital expenditure, according to Morgan Stanley analysts. The trend marks a sharp reversal from the past decade, when second-year earnings estimates were typically downgraded, per strategists led by Jonathan Garner. AI infrastructure investments—data centers, chips, and cloud services—are reshaping emerging-market equities, creating a structural shift in the asset class. The growth contrasts with previous cycles, where commodity booms or manufacturing led gains, now replaced by tech-driven demand. Analysts highlight Taiwan, South Korea, and India as key beneficiaries, with semiconductor and IT services sectors leading the earnings expansion.
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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Emerging-market stocks are heading for their strongest stretch of earnings growth since the 2002-04 super-cycle, powered by a surge in artificial-intelligence investment that is reshaping the asset class, according to Morgan Stanley.That’s in “sharp contrast to the past decade,” when second fiscal-year estimates were on average revised lower from initial levels, strategists led by Jonathan Garner wrote in a note.

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Source: Bloomberg Technology

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