Investing.com -- Morgan Stanley (NYSE:MS) reported that December Semiconductor Industry Association (SIA) billings data came in weaker than expected, particularly in the memory segment, prompting the firm to revise its 2025 semiconductor industry revenue growth forecast downward from 8.1% to 4.8%.
“Sales were up 0.8% month-over-month, below our estimate for a 3.0% increase and the 10-year average change of +1.7%,” Morgan Stanley noted. The three-month year-over-year growth rate also decelerated from 20.3% to 17.1%.
By region, the Americas led with 50.8% year-over-year growth, while Asia Pacific (6.6%) and Japan (5.6%) also saw gains. However, China (-0.6%) and Europe (-14.6%) posted declines.
The bank said the memory markets continue to struggle, with DRAM volume down 5.9% quarter-over-quarter in Q4, compared to a typical seasonal increase of 8.4%.
DRAM revenues were below expectations, rising just 2.4% month-over-month versus our estimate of 15.0%, the analysts said.
They added that NAND markets also weakened, with bits shipped up just 5.2% in Q4 versus an 8.3% seasonal average, while monthly revenue fell 3.6%, well below the expected 6.8% gain.
Despite a muted recovery, the firm maintains a constructive long-term outlook, stating, “We do see the industry generally in a bottoming process everywhere other than the very robust AI investment, which is carrying industry growth.”
Morgan Stanley remains positive on AI-driven growth, highlighting Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) as key beneficiaries, while also favoring value plays like ADI, MKSI, and WDC for a potential cycle rebound.