The chip pullback is ushering in a bumpy market. These sectors are the best bets now, according to Morgan Stanley.

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Beaten-down hyperscalers may benefit as chip stocks struggle

July 6, 2026, 4:54 a.m. ET

The once-hot semiconductor trade has seen a cooling in the last couple of weeks, which is not only likely to continue, but usher in a bumpy ride for the overall stock market.

That’s according to a team of strategists at Morgan Stanley led by Mike Wilson, who flagged in a note to clients on Monday which sectors they believe are the best bets as that rotation continue.

About the Author

Barbara Kollmeyer is based in Madrid, where she leads MarketWatch's premarket coverage of financial markets and writes the Need to Know column. She has worked in London and Los Angeles for MarketWatch previously. Follow her on Twitter @bkollmeyer.